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[Entertainment] Radio Disney Music Awards 2018 Winners: The Complete List Carrie Underwood, 2018 Radio Disney Music Awards, StageIt's time to find out who took home the top honors at the 2018 Radio Disney Music Awards! Taylor Swift, Meghan Trainor, Ed Sheeran, Camila Cabello, BTS, Selena Gomez, Shawn Mendes,...
Published:6/23/2018 9:33:25 PM
[Markets] TV Blackout For Erdogan Opposition As Turkey Vote Looms; Goldman On What To Expect Tomorrow

Presidential and parliamentary elections will be held concurrently in Turkey on Sunday, with the results likely to start emerging on Sunday evening. In the presidential election, opinion polls suggest that President Erdogan is likely to fall just short of the 50% required to win in the first round (implying a second round run-off on July 8). In the parliamentary elections, opinion polls also point to a close result, with a high probability that the incumbent AKP-led Cumhur Alliance could lose its majority.

While victory is likely for Erdogan (as we detailed here), as Live Oak Capital's Brad Hoff notes below, Erdogan is utilizing all his state powers to ensure his own success...

AKP President Recep Tayyip Erdogan and Republican People's Party (CHP) challenger Muharrem Ince.  Image via Hurriyet

Bloomberg reports "State TV TRT gives no air time to opposition's Istanbul rally" while multiple sources confirm a television blackout for the Republican People's Party (CHP) candidate Muharrem Ince as Erdogan's rival continues to reportedly draw immense crowds. 

Screenshot of CHP candidate Muharrem Ince Saturday rally on the Asian side of Istanbul. 

Both are in Istanbul a day ahead of Sunday's vote widely considered the most important in recent Turkish political history — a crossing the Rubicon moment for Erdogan as he stands to inherit an unprecedented and likely irreversible level of sweeping executive authority

We noted previously that Muharrem Ince's political rallies in major cities this week have drawn shockingly large crowds, a worrisome sign for incumbent President Recep Tayyip Erdogan, who called for Sunday's snap election at a time when the economy was stronger and as he likely felt unbeatable. 

But multiple international outlets are noting that while Erdogan is still favored to win, a noticeable surge in popular discontent at runaway inflation and a tanking economy, as well as the conservative AKP party leader's enabling of nepotism and corruption on a mass scale, is bringing a cross-section of Turks to the streets in support of secularist CHP contender Ince. 

For example, Ince's Wednesday rally in Izmir included a crowd size estimating in range from 300,000 up to several million, depending on the media source commenting.

Bloomberg describes the scene in Istanbul on Saturday:

President Recep Tayyip Erdogan's biggest rival appealed to a massive rally in Istanbul in the campaign's final hours. You just wouldn't know it watching state television.

Muharrem Ince, a 54-year-ld former physics teacher, addressed what his CHP party claimed was a crowd of 4 million in the Maltepe district on the Asian side of the Bosphorus. But the government's TRT Haber stayed with its regular programming, interrupting it only when Erdogan addressed smaller groups in his travels around Istanbul.

Bloomberg explains further of early polling that:

Erdogan remains the clear frontrunner in Sunday’s presidential election. But most polls show him short of the 50 percent needed for a first-round win -- opening the way for a runoff in which an ‘anyone-but-Erdogan’ candidate stands a chance. The president’s AK Party also risks losing its majority in the parliamentary vote the same day.

But Sunday's vote is one Erdogan can't afford to lose and as we noted previously he has carefully put the architecture in place for this moment

The Supreme Electoral Council, the judicial system, and the military — until recently Erdogan’s most dedicated nemesis — are all now under Erdogan’s control. The military was completely denuded of its higher ranks following the July 2016 failed coup attempt...

...The national press, meanwhile, is completely dominated by Erdogan’s acolytes. The results are unsurprising: In the last two weeks of May, a study demonstrated that the president and his party received far more coverage on three government-owned television stations, including a Kurdish-language one. — Foreign Policy

The opposition has increasingly relied on social media channels on platforms like YouTube, Twitter, and Google to overcome the media blackout. However, state censors have had these blocked in the past as well. 

So what will happen tomorrow?

via Goldman Sachs,

Turkey’s elections: Opinion polls point to a close result

Turkey will hold presidential and parliamentary elections on Sunday, June 24. Voting will close at 5:00pm local time (3:00pm London time) and preliminary results will be announced on Monday. However, unofficial results are likely to be available on Sunday evening on media outlets. In the event that no presidential candidate achieves more than 50% of the vote in the first round, the two candidates with the largest number of votes will face a run-off on Sunday, July 8.

The election will complete the transition to the new presidential system, with extensive new powers vested in the executive. Unlike previous Turkish elections, this time parties have been able to form alliances, with the 10% threshold for parliamentary representation applying to the alliance as a whole rather than to individual parties. In Exhibit 1, we summarise the policy positions of the government (Cumhur) and opposition (Millet) alliances on key issues.

Exhibit 1: A summary of the government (Cumhur) and opposition (Millet) key policy positions

Note: Not all parties in each alliance subscribe to all of these policies, but they represent our best summary of the alliances' overall views

Source: Goldman Sachs Global Investment Research

The latest polling data point to a close outcome in both the parliamentary and – potentially – the presidential elections. In the presidential elections, President Erdogan has a clear lead over his rivals but most polls indicate that he will fall short of the 50% required to win in the first round.

If the presidential election goes to a second round, polling data point to a close run-off, but a likely Erdogan victory against Muharrem Ince, of the centre-left/secular CHP (Republican People’s Party).

In the parliamentary elections, polling data suggest that the incumbent AKP-led Cumhur Alliance stands a significant chance of losing its parliamentary majority and the key to the outcome appears to be whether the pro-Kurdish HDP party – the only major party not running as part of an alliance – passes the 10% threshold required for parliamentary representation.

For financial markets, each of the likely outcomes comes with associated risks.

In the past, Turkish assets have responded positively to political events that were perceived as increasing political stability, while responding negatively to political instability (Exhibit 2).

Exhibit 2: Asset prices tend to react positively to the perception of political stability in the short run

Turkish asset prices one day/week after political events

Source: Goldman Sachs Global Investment Research

Viewed from this perspective, a win for the AKP in both the presidential and parliamentary elections would be the most stable outcome. However, President Erdogan’s comments on monetary policy during the election campaign – advocating lower interest rates and indicating that he would play a more active role in monetary policy – have raised concerns over the future direction of monetary policy in the event of this outcome.

Though one glance at the current state of Turkish stocks, debt, and FX signals this is a considerable concern...

A split government (with Mr. Erdogan as President and the opposition obtaining a majority in parliament) would likely represent the most negative outcome for Turkish assets, in our view, as it would imply political instability and high levels of uncertainty over the future direction of monetary policy.

An opposition victory in both elections would also bring significant challenges, not least the task of forming a new government and agreeing on a cohesive legislative programme. However, under the assumption that these challenges can be overcome, we would expect it to be the most market-friendly scenario in the medium term.

 

Published:6/23/2018 9:03:21 PM
[Entertainment] Chrissy Teigen Shares Adorable New Photo of Baby Miles With His Great Grandmother Chrissy Teigen, Miles, InstagramIt's all about the generations! Chrissy Teigen made sure to get in some family time, bringing her newborn son, Miles Stephens, to hang with husband John Legend's paternal...
Published:6/23/2018 8:35:12 PM
[Markets] Debunking The Persistent Myth Of U.S. Precision Bombing

Authored by Nicholas Davies via ConsortiumNews.com,

U.S. media routinely repeat Pentagon talking points about the accuracy of U.S. bombing, but how precise are these attacks?

Opinion polls in the United States and the United Kingdom have found that a majority of the public in both countries has a remarkably consistent belief that only about 10,000 Iraqis were killed as a result of the U.S.-British invasion of Iraq in 2003.

Estimates of deaths in Iraq actually range from 150,000 to 1.2 million. Part of the reason for the seriously misguided public perception may come from a serious belief in guided weapons, according to what the government tells people about “precision” bombing.  But one must ask how so many people can be killed if these weapons are so “precise,” for instance in one of “the most precise air campaigns in military history,” as a Pentagon spokesman characterized the total destruction last year of Raqqa in Syria.

The dreadful paradox of “precision weapons” is that the more the media and the public are wrongly persuaded of the near-magical qualities of these weapons, the easier it is for U.S. military and civilian leaders to justify using them to destroy entire villages, towns and cities in country after country: Fallujah, Ramadi and Mosul in Iraq; Sangin and Musa Qala in Afghanistan; Sirte in Libya; Kobane and Raqqa in Syria.

An Imprecise History

The skillful use of disinformation about “precision” bombing has been essential to the development of aerial bombardment as a strategic weapon. In a World War II propaganda pamphlet titled the “Ultimate Weapon of Victory”, the U.S. government hailed the B-17 bomber as “… the mightiest bomber ever built… equipped with the incredibly accurate Norden bomb sight, which hits a 25-foot circle from 20,000 feet.“

However, according to the website WW2Weapons, “With less than 50 per-cent cloud coverage an average B-17 Fortress Group could be expected to place 32.4% of its bombs within 1000 feet of the aiming point when aiming visually.”  That could rise to 60 percent if flying at the dangerously low altitude of 11,000 feet in daylight.

The inaccurate B17 “Flying Fortress”

The U.K.’s 1941 Butt Report found that only five percent of British bombers were dropping their bombs within five miles of their targets, and that 49 percent of their bombs were falling in “open country.”

In the “Dehousing Paper,” the U.K. government’s chief scientific adviser argued that mass aerial bombardment of German cities to “dehouse” and break the morale of the civilian population would be more effective than “precision” bombing aimed at military targets.  British leaders agreed, and adopted this new approach: “area” or “carpet” bombing, with the explicit strategic purpose of “dehousing” Germany’s civilian population.

The U.S. soon adopted the same strategy against both Germany and Japan, and a U.S. airman quoted in the post-war U.S. Strategic Bombing Survey lampooned efforts at “precision” bombing as a “major assault on German agriculture.”

The destruction of North Korea by U.S.-led bombing and shelling in the Korean War was so total that U.S. military leaders estimated that they’d killed 20 percent of its population.

In the American bombing of Vietnam, Laos and Cambodia, the U.S. dropped more bombs than all sides combined in the Second World War, with full scale use of horrific napalm and cluster bombs.  The whole world recoiled from this mass slaughter, and even the U.S. was chastened into scaling back its military ambitions for at least a decade.

The American War in Vietnam saw the introduction of the “laser-guided smart bomb,” but the Vietnamese soon learned that the smoke from a small fire or a burning tire was enough to confuse its guidance system.  “They’d go up, down, sideways, all over the place,” a GI told Douglas Valentine, the author of The Phoenix Program. “And people would smile and say, ‘There goes another smart bomb!’  So smart a gook with a match and an old tire can fuck it up.”

Kicking the Vietnam Syndrome

President Bush Senior hailed the First Gulf War as the moment that America “kicked the Vietnam syndrome once and for all.”  Deceptive information about “precision” bombing played a critical role in revitalizing U.S. militarism after defeat in Vietnam.

The U.S. and its allies ruthlessly carpet-bombed Iraq, reducing it from what a UN report later called “a rather highly urbanized and mechanized society” to “a pre-industrial age nation.”  But the Western media enthusiastically swallowed Pentagon briefings and broadcast round-the-clock bomb-sight footage of a handful of successful “precision” strikes as if they were representative of the entire campaign.  Later reports revealed that only seven percent of the 88,500 tons of bombs and missiles devastating Iraq were “precision” weapons.

The U.S. turned the bombing of Iraq into a marketing exercise for the U.S. war industry, dispatching pilots and planes straight from Kuwait to the Paris Air Show.  The next three years saw record U.S. weapons exports, offsetting small reductions in U.S. arms procurement after the end of the Cold War.

The myth of “precision” bombing that helped Bush and the Pentagon “kick the Vietnam syndrome” was so successful that it has become a template for the Pentagon’s management of news in subsequent U.S. bombing campaigns. It also gave us the disturbing euphemism “collateral damage” to indicate civilians killed by errant bombs.

The devastating aerial assault on Baghdad in 2003, known as “shock and awe.”

‘Shock and Awe’

As the U.S. and U.K. launched their “Shock and Awe” attack on Iraq in 2003, Rob Hewson, the editor of Jane’s Air-Launched Weaponsestimated about 20-25 percent of the U.S. and U.K.’s “precision” weapons were missing their targets in Iraq, noting that this was a significant improvement over the 1999 bombing of Yugoslavia, when 30-40 percent were off-target. “There’s a significant gap between 100 percent and reality,” Hewson said. “And the more you drop, the greater your chances of a catastrophic failure.”

Since World War II, the U.S. Air Force has loosened its definition of “accuracy” from 25 feet to 10 meters (39 feet), but that is still less than the blast radius of even its smallest 500 lb. bombs.  So the impression that these weapons can be used to surgically “zap” a single house or small building in an urban area without inflicting casualties and deaths throughout the surrounding area is certainly contrived.

“Precision” weapons comprised about two thirds of the 29,200 weapons aimed at the armed forces, people and infrastructure of Iraq in 2003.  But the combination of 10,000 “dumb” bombs and 4,000 to 5,000 “smart” bombs and missiles missing their targets meant that about half of “Shock and Awe’s” weapons were as indiscriminate as the carpet bombing of previous wars.  Saudi Arabia and Turkey asked the U.S. to stop firing cruise missiles through their territory after some went so far off-target that they struck their territory. Three also hit Iran.

“In a war that’s being fought for the benefit of the Iraqi people, you can’t afford to kill any of them,” a puzzled Hewson said. “But you can’t drop bombs and not kill people.  There’s a real dichotomy in all of this.”

‘Precision’ Bombing Today

Since Barack Obama started the bombing of Iraq and Syria in 2014 more than 107,000 bombs and missiles have been launched. U.S. officials claim only a few hundred civilians have been killed. The British government persists in the utterly fantastic claim that none of its 3,700 bombs have killed any civilians at all.

Former Iraqi Foreign Minister Hoshyar Zebari, a Kurd from Mosul, told Patrick Cockburn of Britain’s  Independent newspaper that he’d seen Kurdish military intelligence reports that U.S. airstrikes and U.S., French and Iraqi artillery had killed at least 40,000 civilians in his hometown, with many more bodies still buried in the rubble.  Almost a year later, this remains the only remotely realistic official estimate of the civilian death toll in Mosul. But no other mainstream Western media have followed up on it.

The consequences of U.S. air wars are hidden in plain sight, in endless photos and videos. The Pentagon and the corporate media may suppress the evidence, but the mass death and destruction of American aerial bombardment are only too real to the millions of people who have survived it.

Published:6/23/2018 8:35:11 PM
[Entertainment] Chanel Iman and Sterling Shepard Are Expecting A Baby Girl Chanel Iman, Sterling Shepard, InstagramThink pink! Chanel Iman took to Instagram on Saturday to reveal that she and her new hubby Sterling Shepard were expecting a baby girl. This is the couple's first child. The...
Published:6/23/2018 7:34:48 PM
[Entertainment] Luis D. Ortiz Opens Up About His Struggle With Depression and Suicidal Thoughts Luis D. OrtizFollowing the recent suicides Kate Spade and Anthony Bourdain, Million Dollar Listing: New York star Luis D. Ortiz is opening up about "struggling" with suicidal thoughts in hopes of...
Published:6/23/2018 7:03:27 PM
[Markets] Restaurant Owner Who Booted Sanders Says Gay Employees Too Triggered By WH Press Secretary

The owner of the Red Hen restaurant in Lexington, Virginia says that she booted White House Press Secretary Sarah Sanders because her gay employees were triggered over the Trump administration's transgender military ban, according to an interview she gave to the Washington Post.

In a nutshell, Sanders was joining a party of eight booked under her husband's name. The owner, Stephanie Wilkinson, was at home when her chef called to let her know that the staff was highly offended at Sanders's presence: 

Sarah Huckabee Sanders had just walked in and sat down, the chef informed her.

He said the staff is a little concerned. What should we do?” Wilkinson told The Washington Post. “I said I’d be down to see if it’s true.

...

Tell me what you want me to do. I can ask her to leave,” Wilkinson told her staff, she said. “They said yes.

...

Several Red Hen employees were gay, she said. They knew Sanders had defended Trump’s desire to bar transgender people from the military. This month, they had all watched her evade questions and defend a Trump policy that caused migrant children to be separated from their parents.

At the end of the night, staff members wrote on their employee whiteboard "86 Sara Huckabee Sanders" - a code for throwing someone out of an establishment. One of the servers photographed the whiteboard and posted it to his public Facebook wall. 

After the story went viral, Sanders posted to Twitter: "Last night I was told by the owner of Red Hen in Lexington, VA to leave because I work for @POTUS and I politely left. Her actions say far more about her than about me. I always do my best to treat people, including those I disagree with, respectfully and will continue to do so"

People are already comparing the incident to the Christian bakery who was recently granted the right to refuse service to a gay couple over their religious beliefs. Liberals have suggested that conservatives have no right to have a problem with Sanders' ejection, while conservatives are noting that liberals who had been fighting against exclusionary business practices are suddenly OK with Sanders being excluded. 

Either way, the Red Hen now gets to deal with the fallout over a few offended employees who couldn't put their personal feelings aside to do their job. 

Published:6/23/2018 7:03:27 PM
[In The News] Border Agents rescue 57 illegal aliens

By R. Mitchell -

TUCSON, Ariz. – Tucson Sector Border Patrol agents assigned to the Ajo Station arrested a large group of illegal aliens during a heatwave, some in distress, including a pregnant female, west of Lukeville, AZ Friday afternoon. Agents were alerted to the group’s location after receiving a call from the Sonora, Mexico’s 9-1-1 ...

Border Agents rescue 57 illegal aliens is original content from Conservative Daily News - Where Americans go for news, current events and commentary they can trust.

Published:6/23/2018 6:02:26 PM
[Markets] This Is What A Global Trade War Could Look Like

President Trump opened a new front in the global trade war on Friday when he threatened a 20% tariff on cars imported from the European Union unless Europe removes import duties and other barriers to U.S. goods, potentially endangering as much as $300 billion in commerce. Trump's comments sent the European Autos Stocks Index sliding on Friday while shares of Ford Motor and General Motors also dropped.

“Based on the Tariffs and Trade Barriers long placed on the U.S. and it great companies and workers by the European Union, if these Tariffs and Barriers are not soon broken down and removed, we will be placing a 20% Tariff on all of their cars coming into the U.S. Build them here!” Trump tweeted on Friday.

As a reference, the US currently imposes a 2.5% tariff on imported passenger cars from the EU and a 25% tariff on imported pickup trucks, while the EU imposes a 10% tariff on all imported U.S. cars. Furthermore, in 2017, the US trade deficit with the EU on cars was about $40BN per year.

As Reuters adds, the U.S. Commerce Department has a deadline of February 2019 to investigate whether imports of automobiles and auto parts pose a risk to U.S. national security, while Commerce Secretary Wilbur Ross said on Thursday the department aimed to wrap up the probe by late July or August with the Commerce Department planning to hold two days of public comments in July on its investigation of auto imports.

Not long after Trump's tweet, the European Union vowed it was prepared to retaliate immediately should the tariffs be imposed, saying it would continue tit-for-tat escalation in its trade dispute with the U.S. while countering Trump’s assertion that the U.S. is being treated unfairly by the 28-nation bloc.

Speaking to the French Le Monde, Jyrki Katainen, the EU commissioner in charge of jobs and growth, said that "If they decide to raise their import tariffs, we’ll have no choice, again, but to react. We don’t want to fight (over trade) in public via Twitter. We should end the escalation."

Earlier in the week, the EU imposed retaliatory tariffs on €2.8 billion ($3.3 billion) of American products in response to duties on its metals exports deemed to be a threat to U.S. national security. According to Bloomberg, the commission, the bloc’s executive arm, said that the €1 trillion euros in commerce between the EU and U.S. is equitable, and it disputed Trump’s assertion that the EU needs to be punished because of unfair trade practices.

The U.S. had a surplus in services trade with the EU of $45 billion in 2017, according to the memo, citing U.S. statistics. The memo also said the EU is the largest investor in the U.S., accounting for 72 percent of inward foreign direct investment and that EU-headquartered firms employed 3.2 million people in the states.

All in, between trade in goods, services and primary income from investments, the U.S. runs a €12 billion surplus with the EU, according to the memo.

But beyond appealing to numbers, Europe is convinced that Trump would have no choice but to reverse direction once there is sufficient outcry from either politicians, business or if the market itself were to crash: “Members of U.S. Congress, from both parties, don’t necessarily share the views of the president, nor does the private sector,” Katainen told Le Monde. “Once the measures start making an impact, the pressure will mount.”

And speaking of the market reaction, on Friday Bloomberg macro commentator Ye Xie echoed the thoughts of Goldman Sachs from several weeks ago, according to which the market would have to slide for tariffs to become a "credible negotiating tactic", to wit:

If tariffs are going to be used as a credible negotiating tactic to coerce concessions, then it requires a bigger financial markets selloff to make it an effective tool. After all, if investors don't think it's credible, how can you convince your counterparts at the negotiating table to believe it?, Goldman Sachs' analysts argued.

That suggests that some of the tariffs may indeed have to take effect (they can always be rescinded afterwords). All that means is that there's a greater risk for escalation in the trade dispute and a more severe market selloff.

In other words, Trump may be "in too deep" to pull back now without some significant market reaction first, which would by definition imply that one or more rounds of tariffs are likely to be imposed, which beyond merely slamming European car trade with the US, could quickly spiral into an out of control global trade war .

What does that mean for the global economy?

The answer to that question comes from Bank of America, which in turn looked at the growing trade tensions between the US and China, and wrote that "while the actual amount of tariffs that have been imposed by the US to date remain modest at just over $100bn worth of goods imports (only 4.2% of total goods imports), the latest announcement shows that trade tensions are likely to get worse before it gets better."

While BofA's economists caveat that the the likelihood of a full blown global trade war still remains low - although rising fast - it has modeled how a major trade confrontation could potentially impact the US economy.

Following in the footsteps of Barclays, which as we discussed last week modeled a market scenario in which the US raises a 10% uniform tariff on all good and services resulting in a 11% hit to global EPS, BofA used the Fed's FRB/US large-scale general equilibrium macroeconomic model to quantify a global 10% tariff on all goods and services.

For simplicity, we assume a full pass-through of tariffs onto trade prices and impose 3 shocks to the model: 1) 10% import price shock 2) 10% export price shock 3) 10% appreciation in the real trade-weighted exchange rate.(*) The results are as follows:

This is what the model returned in terms of key variables including GDP growth, inflation, and monetary policy.

GDP Growth: The simulation results show a notable drag on growth (Chart 1). Annualized growth rate of real GDP declines by 0.3-0.4pp relative to baseline in the first year and shaves an additional 0.5-0.6pp in the second year before the negative impact slowly fades. This suggests that the boost to growth expected from fiscal stimulus (e.g. tax cuts and greater federal government spending) will essentially be offset by the negative trade shock. The negative growth shock leads to a 0.5pp cumulative decline in the unemployment rate relative to baseline. All told, the level of GDP at its nadir is roughly 1.2% lower than the baseline model.

Inflation: The 10% import price shock leads to a transitory pickup in core inflation. According to FRB/US, core PCE inflation accelerates modestly by about 0.1pp in the first two years before it starts to converge back to baseline. Note that the impact of higher import prices are somewhat offset by our assumption that the dollar would likely appreciate in a trade war. In a scenario where there is less response from the dollar, we would expect a greater pass-through of higher import prices to consumer prices. Nevertheless, these results are broadly consistent with our partial equilibrium inflation model based on former-Chair Yellen's inflation model.(*) Based on this model, core PCE inflation is about 0.2pp higher in the first year of the shock before readjusting back to baseline (Chart 2).

Monetary Policy: Results from FRB/US show that, initially, the Fed would likely stay on course, maintaining its current path of policy. However, starting in year 2, the material weakening of aggregate demand should ultimately force the Fed to slow the pace of hikes by getting in roughly 2.5 fewer hikes relative to baseline, implying that the terminal rate would end up approximately 50-75bps lower at around 2.50-2.75%. The decline in the path of the fed funds rate is greater than the response in 10yr Treasuries leading to a steepening of the curve as expected by our rates strategy team.

Perhaps the most important aspect of the above, is BofA's claim that the lagged response in monetary policy to a the potential start of a trade war is unlikely to deter the Fed from its plans to raise rates this year. As such, contrary to expectations that a trade war could spike import costs, BofA's argument is that anything, trade wars provide a potential catalyst for the next slowdown in the economy, which incidentally would hit just as the fiscal stimulus fades.

There is one other potential unknown: how will potential uncertainty shock the system? Already we have seen the New Orders print of the Philly Fed tumble recently, a slide which was attributed to concerns about protectionism, and one which can quickly spread to both capital markets and the economy.

To better understand the propagation of uncertainty shocks through the economy, BofA claculates that a temporary, one-standard deviation uncertainty shock results in a quick, albeit modest, drop in industrial production (Chart 3).

However, a full blown trade war would result in a larger increase in uncertainty which would lead to a more substantial fall in IP. For example, a three-standard deviation shock would lead to IP falling by nearly 1% in the near term. The impact could be even greater if the uncertainty shock is sustained which would likely lead to an abrupt slowdown in business activity. Combined with a tariff shock, we see a high probability that a major trade war would push the economy towards a full blown recession.

Which brings us to BofA's summary assessment on the growing threat of a trade war, which unlike several weeks ago, the bank now finds far more pressing:

So far, the trade actions taken by the Trump White House and trading partners have been relatively modest and in turn have had a limited impact on the economy and financial markets. The next round of $100-$200bn of tariff between US and China may prove more substantial. Further escalation like auto tariffs would lead us to reassess the US economic outlook. In the meantime, we will be keeping a close eye on financial markets and confidence data as they will likely give an early indication on the potential impact to the economy.


In conclusion, the Bank writes that whereas the good news is that we are still many steps away from a full blown global trade war, "the bad news is that the tail risks are rising and our work and the literature suggest a major global trade confrontation would likely push the US and the rest of the world to the brink of a recession" as shown in the chart below.

Published:6/23/2018 6:02:26 PM
[Entertainment] Catfish to Resume Filming After Nev Schulman Sexual Misconduct Claims Found Not Credible, MTV Says Nev SchulmanMTV says it will resume production on its hit show Catfish after an investigation found sexual misconduct claims against its host and executive producer Nev Schulman to be not...
Published:6/23/2018 5:32:09 PM
[Markets] Star Wars Redux: Trump's Space Force

Authored by Karl Grossman via Counterpunch.org,

If Donald Trump gets his way on formation of a Space Force, the heavens would become a war zone. Inevitably, there would be military conflict in space.

The Outer Space Treaty of 1967 which designates space as the global commons to be used for peaceful purposes—and of which Russia and China, as well as the United States, are parties—and the years of work facilitating the treaty since would be wasted.

If the U.S. goes up into space with weapons, Russia and China, and then India and Pakistan and other countries, will follow.

Moreover space weaponry, as I have detailed through the years in my writings and TV programs, would be nuclear-powered—as Reagan’s Star Wars scheme was to be with nuclear reactors and plutonium systems on orbiting battle platforms providing the power for hypervelocity guns, particle beams and laser weapons.

This is what would be above our heads.

Amid the many horrible things being done by the Trump administration, this would be the most terribly destructive.

“It is not enough to merely have an American presence in space, we must have American dominance in space,” Trump said at a meeting of the National Space Council this week.

“Very importantly, I’m hereby directing the Department of Defense and Pentagon,” he went on Monday, “to immediately begin the process necessary to establish a Space Force as the sixth branch of the armed forces; that is a big statement. We are going to have the Air Force and we are going to have the Space Force, separate but equal, it is going to be something.”

The notion of the U.S. moving into space with weaponry isn’t new.

It goes back to the post-World War II years when the U.S. government brought former Nazi rocket scientists from Germany to the U.S.—mainly to the U.S. Army’s Redstone Arsenal in Huntsville, Alabama—to use “their technological expertise to help create the U.S. space and weapons program,” writes Jack Manno, who retired last year as a professor at the State University of New York/Environmental Science and Forestry College, in his book Arming the Heavens: The Hidden Military Agenda for Space, 1945-1995.

 “Many of the early space war schemes were dreamt up by scientists working for the German military, scientists who brought their rockets and their ideas to America after the war,” he relates. “It was like a professional sports draft.”

Nearly 1,000 of these scientists were brought to the U.S., “many of whom later rose to positions of power in the U.S. military, NASA, and the aerospace industry.” Among them were “Wernher von Braun and his V-2 colleagues” who began “working on rockets for the U.S. Army,” and at the Redstone Arsenal “were given the task of producing an intermediate range ballistic range missile to carry battlefield atomic weapons up to 200 miles. The Germans produced a modified V-2 renamed the Redstone….Huntsville became a major center of U.S. space military activities.”

Manno writes about former German Major General Walter Dornberger, who had been in charge of the entire Nazi rocket program who, “in  1947, as a consultant to the U.S Air Force and adviser to the Department of Defense…wrote a planning paper for his new employers. He proposed a system of hundreds of nuclear-armed satellites all orbiting at different altitudes and angles, each capable or reentering the atmosphere on command from Earth to proceed to its target. The Air Force began early work on Dornberger’s idea under the acronym NABS (Nuclear Armed Bombardment Satellites).”

For my 2001 book, Weapons in Space, Manno told me that “control over the Earth” was what those who have wanted to weaponize space seek. He said the Nazi scientists are an important “historical and technical link, and also an ideological link….The aim is to…have the capacity to carry out global warfare, including weapons systems that reside in space.”

But then came the Outer Space Treaty put together by the U.S., Soviet Union and the United Kingdom. In the 2001 TV documentary I wrote and narrate, “Star Wars Returns.”

Craig Eisendrath, who had been a U.S. State Department officer involved in its creation, notes that the Soviet Union launched the first space satellite, Sputnik, in 1957 and “we sought to de-weaponize space before it got weaponized…to keep war out of space.”

Adopted by the UN General Assembly in 1966, it entered into force in 1967.  It has been ratified or signed by 123 nations.

It provides that nations “undertake not to place in orbit around the Earth any objects carrying nuclear weapons or any other kinds of weapons of mass destruction, install such weapons on celestial bodies, or station such weapons in space in any other manner.”

Atomic physicist Edward Teller, the main figure in developing the hydrogen bomb and instrumental in founding Lawrence Livermore National Laboratory in California, pitched to Ronald Reagan, when he was governor of California visiting the lab, a plan of orbiting hydrogen bombs which became the initial basis for Reagan’s “Star Wars.” The bombs were to energize X-ray lasers. “As the bomb at the core of an X-ray battle station exploded, multiple beams would flash out to strike multiple targets before the entire station consumed itself in in a ball of nuclear fire,” explained New York Times journalist William Broad in his 1986 book Star Warriors.

Subsequently there was a shift in “Star Wars” to orbiting battle platforms with nuclear reactors or “super” plutonium-fueled radioisotope thermoelectric generators on board that would provide the power for hypervelocity guns, particle beams and laser weapons.

The rapid boil of “Star Wars” under Reagan picked up again under the administrations George H. W. Bush and son George W. Bush. And all along the U.S. military has been gung-ho on space warfare.

A U.S. Space Command was formed in 1982.

“US Space Command—dominating the space dimension of military operations to protect US interests and investment. Integrating Space Forces into war-fighting capabilities across the full spectrum of conflict,” it trumpeted in its 1998 report Vision for 2020. It laid out these words to resemble the crawl at the start of the Star Warsmovies. The U.S. Space Command was set up by the Pentagon to “help institutionalize the use of space.” Or, as the motto of one of its units declares, to be “Master of Space.”

Vision for 2020states, “Historically, military forces have evolved to protect national interests and investments-both military and economic.” Nations built navies “to protect and enhance their commercial interests” and during “the westward expansion of the United States, military outposts and the cavalry emerged to protect our wagon trains, settlements and railroads. The emergence of space power follows both of these models. During the early portion of the 2lst Century, space power will also evolve into a separate and equal medium of warfare.”

“It’s politically sensitive, but it’s going to happen,” remarked U.S. Space Command Commander-in-Chief Joseph W. Ashy in Aviation Week and Space Technology (8/9/96):

“Some people don’t want to hear this, and it sure isn’t in vogue, but—absolutely—we’re going to fight in space. We’re going to fight from space and we’re going to fight into space…. We will engage terrestrial targets someday—ships, airplanes, land targets—from space.”

Or as Assistant Secretary of the Air Force for Space Keith R. Hall told the National Space Club in 1997: “With regard to space dominance, we have it, we like it and we’re going to keep it.”

The basic concept of the Pentagon’s approach to space is contained in The Future of War: Power, Technology & American World Dominance in the 2lst Century. Written by “arms experts” George and Meredith Friedman, the 1996 book concludes: “Just as by the year 1500 it was apparent that the European experience of power would be its domination of the global seas, it does not take much to see that the American experience of power will rest on the domination of space. Just as Europe expanded war and its power to the global oceans, the United States is expanding war and its power into space and to the planets. Just as Europe shaped the world for a half a millennium [by dominating the oceans with fleets], so too the United States will shape the world for at least that length of time.”

Or as a 2001 report of the U.S. Space Commission led by then U.S. Secretary of Defense Donald Rumsfeld asserted:

“In the coming period the U.S. will conduct operations to, from, in and through space in support of its national interests both on the earth and in space.”

Nuclear power and space weaponry are intimately linked.

“In the next two decades, new technologies will allow the fielding of space-based weapons of devastating effectiveness to be used to deliver energy and mass as force projection in tactical and strategic conflict,” stated New World Vistas: Air and Space Power for the 21st Century, a 1996 US Air Force board report. “These advances will enable lasers with reasonable mass and cost to effect very many kills.” However, “power limitations impose restrictions” on such space weaponry making them “relatively unfeasible,” but “a natural technology to enable high power is nuclear power in space.” Says the report: “Setting the emotional issues of nuclear power aside, this technology offers a viable alternative for large amounts of power in space.”

Or as General James Abrahamson, director of the Strategic Defense Initiative, put it at a Symposium on Space Nuclear Power and Propulsion, “without reactors in orbit [there is] going to be a long, long light [extension] cord that goes down to the surface of the Earth” to power space weaponry.

Thus nuclear power would be needed for weapons in space.

Since 1985 there have been attempts at the UN to expand the Outer Space Treaty of 1967 to prohibit not only nuclear weapons but all weapons from space. This is called the Prevention of an Arms Race in Outer Space (PAROS) treaty and leading in urging its passage have been Canada, Russia and China. There has been virtually universal backing from nations around the world for it. But by balking, U.S. administration after administration has prevented its passage.

Although waging war in space was hotly promoted by the Reagan and Bush administrations and ostensibly discouraged by the Obama administration and Clinton administration, all U.S. administrations have refused to sign on to the PAROS treaty.

In my book Weapons in Space, I relate a presentation I gave at a conference at the UN in Geneva in 1999 on the eve of a vote the next day on PAROS. I spoke about the “military use of space being planned by the U.S.” being “in total contradiction of the principles of peaceful international cooperation that the U.S. likes to espouse” and “pushes us—all of us—to war in the heavens.”

I was followed by Wang Xiaoyu, first secretary of the Delegation of China, who declared: “Outer space is he common heritage of human beings. It should be used for peaceful purposes…It must not be weaponized and become another arena of the arms race.”

The next day, on my way to observe the vote, I saw a U.S. diplomat who had been at my presentation. We approached each other and he said he would like to talk to me, anonymously. He said, on the street in front of the UN buildings, that the U.S has trouble with its citizenry in fielding a large number of troops on the ground. But the U.S military believes “we can project power from space” and that was why the military was moving in this direction. I questioned him on whether, if the U.S. moved ahead with weapons in space, other nations would meet the U.S. in kind, igniting an arms race in space. He replied that the U.S. military had done analyses and determined that China was “30 years behind” in competing with the U.S. militarily in space and Russia “doesn’t have the money.” Then he went to vote and I watched as again there was overwhelming international support for the PAROS treaty—but the U.S. balked. And because a consensus was needed for the passage of the treaty, it was blocked once more.

And this was during the Clinton administration.

With the Trump administration, there is more than non-support of the PAROS treaty but now a drive by the U.S. to weaponize space.

It could be seen—and read about—coming.

“Under Trump, GOP to Give Space Weapons Close Look,” was the headline of an article in 2016 in Washington-based Roll CallIt said “Trump’s thinking on missile defense and military space programs have gotten next to no attention, as compared to the president-elect’s other defense proposals….But experts expect such programs to account for a significant share of what is likely to be a defense budget boost, potentially amounting to $500 billion or more in the coming decade.”

Intense support for the plan was anticipated from the GOP-dominated Congress. Roll Call mentionedthat Representative Trent Franks, a member of the House Armed Services Committee and an Arizona Republican, “said the GOP’s newly strengthened hand in Washington means a big payday is coming for programs aimed at developing weapons that can be deployed in space.”

In a speech in March at the U.S. Marine Corps Air Station near San Diego, Trump declared:

“My new national strategy for space recognizes that space is a war-fighting domain, just like the land, air, and sea. We may even have a Space Force—develop another one, Space Force. We have the Air Force; we’ll have the Space Force.”

Bruce Gagnon, coordinator of the Global Network Against Weapons and Nuclear Power in Space, notes that Trump cannot establish a Space Force on his own—that Congressional authorization and approval is needed.  And last year, Gagnon points out, an attempt to establish what was called a Space Corps within the Air Force passed in the House but “stalled in the Senate.”

“Thus at this point it is only a suggestion,” said Gagnon of the Maine-based Global Network.

“I think though,” Gagnon went on, “his proposal indicates that the aerospace industry has taken full control of the White House and we can be sure that Trump will use all his ‘Twitter powers’ to push this hard in the coming months.”

Meanwhile, relates Gagnon, there is the “steadily mounting” U.S. “fiscal crisis…Some years ago one aerospace industry publication editorialized that they needed a ‘dedicated funding source’ to pay for space plans and indicated that it had come up with it—the entitlement programs. That means the industry is now working to destroy Social Security, Medicare, Medicaid and what little is left of the welfare program. You want to help stop Star Wars and Trump’s new Space Force. Fight for Social Security and social progress in America. Trump and the aerospace industry can’t have it both ways—it’s going to be social progress or war in space.”

As Robert Anderson of New Mexico, a board member of the Global Network, puts it:

“There is no money for water in Flint, Michigan or a power grid in Puerto Rico, but there is money to wage war in space.”

Or as another Global Network director, J. Narayana Rao of India, comments: “President Donald Trump has formally inaugurated weaponization of space in announcing that the U.S. should establish a Space Force which will lead to an arms race in outer space.”

Russian officials are protesting the Trump Space Force plan, “Militarization of space is a way to disaster,” Viktor Bondarev, the head of the Russian Federation Council’s Defense and Security Committee, told the RIA news agency the day after the announcement. This Space Force would be operating in “forbidden skies.” He said Moscow is ready to “strongly retaliate” if the US violates the Outer Space Treaty by putting weapons of mass destruction in space.

And opposition among legislators in Washington has begun. “Thankfully the president cannot do it without Congress because now is NOT the time to rip the Air Force apart,” tweeted Senator Bill Nelson of Florida.

“Space as a warfighting domain is the latest obscenity in a long list of vile actions by a vile administration,” writes Linda Pentz Gunter, who specializes in international nuclear issues for the organization Beyond Nuclear, this week. “Space is for wonder. It’s where we live. We are a small dot in the midst of enormity, floating in a dark vastness about which we know a surprising amount, and yet with so much more still mysteriously unknown.”

“A Space Force is not an aspiration unique to the Trump administration, of course,” she continued on the Beyond Nuclear International website of the Takoma Park, Maryland group, “but it feels worse in his reckless hands.”

Published:6/23/2018 5:32:06 PM
[Entertainment] Lena Dunham and Ex Jack Antonoff Get Cozy in Photo: "Best Friends 4ever" Lena Dunham, Jack Antonoff, InstagramLena Dunham and Jack Antonoff remain friendly exes, six months after their split. The 32-year-old Girls creator and star and the 34-year-old Bleachers singer and fun. guitarist broke up...
Published:6/23/2018 5:03:21 PM
[Markets] China Hides Real Trade War Retaliation In Plain Sight - Stealth Devaluation

While headlines distract the world's investors with headlines of Trump and Xi exchanging trade-war shots - with Trump going big with tariff threats ($450bn) and China trying to play 'good cop' - something notable has been happening in the FX markets that few are paying attention to.

As we previously noted, there are 6 possible things that China can do at this time, in order of escalating severity:

  1. China could de-escalate tensions by presenting a list of actions it will follow to reduce its significant trade deficits in services with the US. This could affect education service institutions, the local tourist industry, and entertainment. However, as the CFR's Brad Setser writes, it increasingly looks like the Administration is putting China in a position where China cannot make concessions without appearing to cave - which most think China won't do. Setser, not alone, has trouble seeing a de-escalation option if Trump goes through with the $200b

  2. China will likely launch an economic subsidy for its economy in the form of further easing in financial conditions to offset any potential trade-drag. Some, such as Deutsche Bank have proposed that in order to offset the negative hit to its consumers, China will loosen policy such as tolerating the property and land market boom in tier 3 cities and cutting the RRR twice over the rest of this year to partly offset the potential drags. This would also involve a modest devaluation of the Yuan.

  3. China could unleash differential treatment of local enterprises: as some have suggested, Beijing could simply opt not apply its "market access liberalization" policy recently announced. This could greatly disadvantage US firms greatly. Beijing could also engage in an aggressive crackdown on US firms operating in China (Apple), hinder border passage of US products (automotive), or pursue antitrust and monopoly allegations against US tech names (Micron).

  4. China could also choose a diplomatic retaliation, and order Kim Jong Un to scuttle the recent agreement North Korea signed with the US, humiliating Trump by showing that it was Beijing all along who made the US-N. Korea summit possible and successful.

  5. China could pick an aggressive route, and instead of a mild depreciation, it could aggressively pursue a weaker Yuan to boost trade competitiveness: which, ironically, is the catalyst behind much of the Trump administration's animosity toward China. To achieve this, China would relaxing some of the capital control measures that have helped strengthen the renminbi in the past 2 years. That said, such a move would unleash sizable outflow demand, while boosting precious metals and cryptos. The US would also brand China a currency manipulator.

  6. China, finally, could pick the nuclear option, and gradually or suddenly liquidate its Treasury holdings. This is a long-running worry by markets given China’s $1.2 trillion in Treasury holdings. In January, Bloomberg reported this was a possibility which was at the time denied by China State Administration of Foreign Exchange; however the recent liquidation of half of Russia's Treasurys was seen by some as a rehearsal for what would happen if Beijing decides to pursue this approach.

Having continued its tit-for-tat tariff threats (which implicitly China would lose), this week saw China, perhaps, take a step towards Scenario 1 - de-escalation - with Chinese trade officials have "quietly" approached the US to find a way to minimize punitive tariffs on Chinese goods.

But, as always, this appears to be a distraction as Scenario 5 - devaluation, seems to be accelerating quickly...

Offshore Yuan - having reached its strongest since August 2015's sudden devaluation - has tumbled almost 5% in the last few weeks, breaking below its 200-day moving-average as PBOC 'allows' its currency to depreciate against the greenback.

So far, President Trump seems to have not noticed this devaluation, but the world's speculators certainly have as the last week saw FX Speculators dramatically shift to a net bullish position (the most bullish since April 2017) with the greatest swing in positioning in history...

As Bloomberg notes, the net stance changed to a long of 134,925 contracts in the week through June 19, from a short of 22,084 the previous week. The move to a long position, the first this year, comes after a rally that’s seen the greenback climb by more than 5 percent since around the middle of April.

Meanwhile, as specs swing violently dollar bullish, they are also reverting to the old playbook of selling volatility - with the largest short VIX net position since the Feb XIV collapse...

As traders appear to be chasing momentum and the re-collapse of realized volatility...

The S&P 500 Index is flirting with its 11th straight day with a move of less than 0.5 percent in either direction. The streak is already the longest since November and is an indication that the calm of last year may be returning to equities after a bout of volatility back in February.

And piling-on to that apparently risk-on positioning in VIX, bond speculators remain in aggregate near record short across the Treasury market - undeterred by the ongoing collapse in the yield curve.

One thing of significant note is the dramatic unwind of the $4 trillion net short Eurodollar futures position as traders give up on their rate-hike bets en masse (now less than $3 trillion net notional short).

*  *  *

So to sum up - amid all the threats of trade tariffs and retaliations, Russia dumped half its Treasury holdings and China is now devaluing its currency - and speculators appear to be betting on that continuing (record spike in USD spec longs). However, while the last time a China devaluation sparked global chaos in every asset class (vol explodes, stocks plunge, Treasury yields tumble), it appears the same speculators think it's different this time - being aggressively net short vol and massively net short Treasuries.

Published:6/23/2018 5:03:20 PM
[Entertainment] Brigitte Nielsen Gives Birth to Baby No. 5 Brigitte Nielsen, Baby, PregnancyBrigitte Nielsen is officially a mom of five at the age of 54! The model, actress and reality TV star has given birth to her fifth child and first daughter, a baby girl named Frida, on...
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[Entertainment] Kourtney Kardashian and Younes Bendjima Kiss While Swimming in Sea Near Capri Kourtney Kardashian, Younes BendjimaPDA alert! On Friday, Kourtney Kardashian and Younes Bendjima were photographed making out while swimming in the ocean off the coast of the Italian island of Capri. The two also spent...
Published:6/23/2018 3:32:14 PM
[In The News] President Trump talks illegal immigration in this week’s address 6/23/18 [video + transcript

By R. Mitchell -

President Donald Trump spoke about illegal immigration, loopholes, and Congressional failure to act in this week’s Presidential Address. “Democrat-supported loopholes in our federal laws have enabled roughly half a million illegal immigrant family members and minors from Central America to be released into the United States since 2014, at unbelievably ...

President Trump talks illegal immigration in this week’s address 6/23/18 [video + transcript is original content from Conservative Daily News - Where Americans go for news, current events and commentary they can trust.

Published:6/23/2018 3:32:14 PM
[Markets] "Obama Kept Them In Cages" - The Pedophrasty Of Politicians Exposed

President Trump started off his day in attack mode (as is almost ubiquitous these days), exclaiming that "The Russian Witch Hunt is Rigged," and how poll number show Americans rapidly losing faith in the 'Russia collusion' narrative. All of which explains their sudden shift to a new narrative - hitler-like separation (and caging) of poor desperate illegal immigrant children from their loving caring illegal immigrant parents.

While the media has been loathed to admit it - the separation policy is not a hitler-confirming Trump decision, it has been in place for many years and, as Trump tweeted, Obama faced similar headlines (though somehow was not compared to Hitler and lambasted in the media)...

Then took direct aim at The Democrats lack of a solution...

But as The Automatic Earth's Raul Ilargi Meijer explains so eloquently below, the pedophastry and bigoteering of politicians everywhere (ably assisted by a subservient liberal media) has enabled 'fake news' to become fact in an ever-increasing divergence from reality.

The two most viral photographs of the ‘Trump Separation Scandal’ have now been debunked, or at the very least been proven to have been used ‘out of context’. This is a dangerous development, as are the reasons to use them the way they have been. Both pictures are of children who had not been separated from their mothers at all. But both were used to depict just that: a child being taken away from its mother.

What’s dangerous about this is, first, that those who spread the narrative regardless of the truth may next permit themselves to use images from entirely different locations or times to make their point. Yes, children have been taken from parents at US borders. And attention for that is warranted, very much so. But playing loose with the facts turns those facts into a mere narrative in which nobody can tell fact from fiction anymore.

First, a week ago already, I saw this on RT: Debunked: Viral Image Of Crying, Caged Toddler ‘Detained By ICE’ Not What It Seems

A distressing image of a crying toddler locked in a barred cage after purportedly being detained by US immigration officials has gone viral – but despite online claims, it does not actually depict what has been alleged. The image, which shows a little boy crying in a cage as he looks out between its bars, was shared by activist journalist and undocumented migrant Jose Antonio Vargas as a comment on the Trump administration’s immigration crackdown on families.

In the same thread, Vargas admitted that he came across the photo on a friend’s timeline and was still looking for the original source. Nevertheless, the snap quickly went viral with Vargas’ post garnering more than 23,000 retweets and many others sharing the image across their own social media accounts.

Vargas explained that he shared the photo because when he was detained by ICE in McAllen, Texas in 2014, he encountered children who were locked up there. “It wasn’t okay then; it’s not okay now,” he wrote, adding that he’s been outraged about the incident for years.

It has since emerged that the picture was in fact not from a detention facility at all, and instead was taken at a protest against Trump’s immigration policies held on June 10 outside Dallas City Hall. The demonstration organized by Brown Berets de Cemanahuac was held to call out the policy of family separation and confining undocumented children.

Ergo: an activist journalist and undocumented immigrant makes it look as if a picture depicts something that in reality it did not. Note also that the article says he wanted to comment on the Trump immigration crackdown, because he has memories of the Obama immigration crackdown, when he saw children locked up. But then, hey, that’s social media, right? Anyone can say anything.

It’s different, though, when TIME Magazine uses such politics. And its editor-in-chief defends the use of the picture by saying it was the most visible symbol of something, even though he knew full well that the photo didn’t depict that something. That’s a mighty slippery scale. If they could have achieved the same effect with a picture of a overripe banana taken in the Pacific in the 1950’s, they probably would have used it. It’s the effect that counts, not the facts.

Fact-Check: Was Migrant Girl On US Border Taken From Mother? Unfounded

Two photos that went viral on social media depict scenes that are not directly related to the family separations taking place on the US-Mexico border since early May. The most prominent, of Honduran two-year-old Yanela Varela crying inconsolably, has become a global symbol of the separations – helping to attract more than $18 million in donations for a Texas non-profit called RAICES. The photograph was taken on June 12 in McAllen, Texas by John Moore, a Pulitzer Prize-winning photographer for Getty Images.

An online article about the picture, published by Time Magazine, initially reported the girl was taken from her mother, but was subsequently corrected to make clear that: “The girl was not carried away screaming by US Border Patrol agents; her mother picked her up and the two were taken away together.” Time Magazine nonetheless used the image of the sobbing child on its cover, next to an image of President Trump looming over her, with the caption “Welcome to America”. The head of Honduras’ Migrant Protection Office Lisa Medrano confirmed to AFP that the little girl, just two years old, “was not separated” from her family.

The child’s father also said as much. Denis Varela told the Washington Post that his wife Sandra Sanchez, 32, had not been separated from their daughter, and that both were being detained together in an immigration center in McAllen. Under fire for its cover – which was widely decried as misleading including by the White House – the magazine said it was standing by its decision. “The June 12 photograph of the 2-year-old Honduran girl became the most visible symbol of the ongoing immigration debate in America for a reason,” Time’s editor-in-chief Edward Felsenthal said.

[ZH: And here's the corrected version:]

Nassim Nicolas Taleb, of black swans and Fragility, has found the appropriate term for this ‘phenomenon’, and explains why it works so well that TIME apparently doesn’t care about the damage to its reputation caused by using photographs for such purposes.

Pedophrasty, Bigoteering, and Other Modern Scams

Pedophrasty Definition: Argument involving children to prop up a rationalization and make the opponent look like an asshole, as people are defenseless and suspend all skepticism in front of suffering children: nobody has the heart to question the authenticity or source of the reporting. Often done with the aid of pictures. [..] Pedophrasty is effective as it provides arguments to strike before the evidence is formed. People are moved into “doing something” Pedophrasts prey on our maternal (and paternal) instincts.

Pedophrasty has its most effects on actors, journalists and similar types who are intellectually insecure, deprived of critical judgment, and afraid of being classified as violators of some norm of political correctness. For instance, pedophrasty has been commonly used in the Syrian war by such propagandists as Julian Roepke continuously supplying the German public with pictures of dead children. Or the various lobbies hired by Saudi Barbaria (and allies), such as the Middle East Institute in Washington DC, to promote Sunni Islamist policies under the cover of “think tanks”.

The Nayirah testimony: a false congressional testimony by 15-year-old girl who provided only her first name, Nayirah (she turned out to be the daughter of the Kuwaiti ambassador to the U.S.) was a bit responsible into tipping the US into the war. Nayirah claimed that she had witnessed Iraqi soldiers take babies out of incubators a Kuwaiti hospital, and leave the babies to die. Nobody dared to question the veracity of her claims.

That’s what is dangerous: seeing a photo of a child in distress makes people halt their critical thinking. That’s also why such photos are used. They help build a narrative that doesn’t have to be factual to shock people. But at that point TIME becomes a fiction magazine; it’s where it leaves journalism behind.

The narrative also depends to a large extent on the singularity of Trump’s brutality compared to other presidents and nations’ leaders. It seeks to single him out as being extremely cruel. That narrative will fall to pieces going forward, and not only because the stories behind the photos have now been exposed.

First, here’s a look at what happened under earlier US presidents, in this case Obama, published by the ACLU in May 2018:

ACLU Obtains Documents Showing Widespread Abuse Of Child Immigrants In US Custody

Documents obtained by the American Civil Liberties Union featured in a new report released today show the pervasive abuse and neglect of unaccompanied immigrant children detained by U.S. Customs and Border Protection. The report was produced in conjunction with the International Human Rights Clinic at the University of Chicago Law School.

“These documents provide a glimpse into a federal immigration enforcement system marked by brutality and lawlessness,” said Mitra Ebadolahi, ACLU Border Litigation Project staff attorney. “All human beings deserve to be treated with dignity and respect regardless of their immigration status — and children, in particular, deserve special protection. The misconduct demonstrated in these records is breathtaking, as is the government’s complete failure to hold officials who abuse their power accountable. The abuse that takes place by government officials is reprehensible and un-American.”

The report is based on over 30,000 pages of documents dated between 2009 and 2014.

Then, what other ‘leaders’, who express their ‘disgust’ and worries at the Trump separation policies do at home. The Guardian yesterday:

Theresa May’s Brutal Family Separations Would Make Trump Blush

[..] as a British citizen I cannot, in good faith, reassure myself with that time-old mantra that we are somehow more civilised and less cruel or brutal than our cousins across the pond. Nor do I think that condemnation from our government can carry any real currency. Since long before anybody had heard the words “Make America great again”, splitting up families has been official policy in Theresa May’s Home Office – and it has been carried out with a brutality and on a scale that would make even President Trump blush.

The Children’s Commissioner has found that at least 15,000 children growing up in the UK live without a parent because the right of British citizens to reunite with a foreign spouse is limited by an unreasonable income threshold, an impossible complicated application system fraught with Home Office errors, and no legal aid for families to challenge incorrect decisions.

And the Sydney Morning Herald from December 2017:

Australia Is Wilfully Damaging The Health Of Children On Nauru To Make A Point – And It Is Appalling

When we visited Nauru as paediatric specialists three years ago, we were asked to see 30 of the 100 children being detained on the island. Among them was a six-year-old girl who had tried to kill herself and a two-year-old boy with such severe behaviour problems a doctor had prescribed anti-psychotic medicines. Their parents were in despair. They had fled persecution, trying to save their children from harm, but had ended up imprisoned on a remote island, without hope.

We left with the view that these were the most traumatised children we had ever consulted on, far worse than children we had seen in Australia, Africa, Asia or Europe. Three years later, 43 of those children remain on the island. Officially they are now free to move around, but reports of attacks by locals show Nauru is not safe and so they remain in the “Regional Processing Centre”.

In 2014, the Australian Human Rights Commission reported that children at this centre were deeply traumatised psychologically, and had even been abused. Their detention was harming them. When Australia introduced mandatory detention in 1992, it took 10 weeks on average to process an application for refugee status. Now it takes years. As the numbers of children in detention fall, the length of time in detention rises. This is deliberate: wilfully damaging children’s health to deter others from seeking asylum.

See, what TIME Magazine and others do, using pictures of crying children regardless of their actual context, may make for an initially appealing narrative, but in the end their approach only distracts from what really matters. Which is that children need to be with their mothers (and preferably fathers).

Just reporting the facts on this is not only enough, it’s the only way to report on it. Once you start making up stuff, you’re done, and the truth is done.

US immigration laws are clearly not working; so change them. ICE is a terrible organization that has attracted far too many sociopaths. Close it down. Child abuse as a tool to instill fear has been an international political tool for a very long time. Those are the things that should be making headlines. Turning this into yet another anti-Trump narrative, using crying children as shortcuts to people’s emotions, doesn’t work, or not for long.

This is not about Trump. Trying to make it about him is not going to help those children. And that’s what you want, right? Right?

Published:6/23/2018 3:32:14 PM
[Entertainment] Sarah Hyland Returns Home From Hospital While Wells Adams Shows Support From Afar Sarah Hyland, Wells Adams, InstagramSarah Hyland is back home and on the mend after her recent health scare. The 27-year-old Modern Family star shocked fans on Thursday night when she posted on Instagram Stories a selfie...
Published:6/23/2018 3:01:26 PM
[Markets] Russia Reiterates Warning That Trump's Space-Force Could Trigger Next Cold War

Russian foreign ministry Maria Zakharova on Wednesday expressed alarm over President Donald Trump’s order for the Pentagon to “immediately” establish a “space force” as an independent service branch. She informed reporters that Moscow is closely examining Washington’s plan to weaponize outer space.

Russian Foreign Ministry spokeswoman Maria Zakharova addressing reporters on Wednesday. (Source: Albert Dzen/TASS) 

Here is the moment when President Trump announced plans for his new space force:

During a press conference Monday, Donald Trump said, “we must have American dominance in space. Very importantly, I am hereby directing the Department of Defense and Pentagon to immediately begin the process necessary to establish a Space Force as the Sixth Branch of the Armed Forces.”

“We’ve taken note of the US president’s instruction given to the Chairman of the Joint Chiefs of Staff to pull the military space force out of the Air Force and to convert it into a separate branch,”Zakharova said. “What makes this piece of news most alarming is the purpose of the instruction was described in very clear terms – dominance in space.”

Zakharova told reporters this confirms that Washington “is hatching plans for putting weapons in space with a view to the possibility of conducting combat operations there.”

“It’s not just guesses. It’s the understanding of the realities. Naturally, we keep the closest watch on Washington’s intentions and analyze the likely effects,” Zakharova said.

“A military buildup in space, in particular, after the deployment of weapons there, would have destabilizing effects on strategic stability and international security.

“Russia takes a fundamentally different position and attaches priority to using and exploring space exclusively for peaceful purposes,” Zakharova said.

“Over the past few years, we put forward a number of initiatives for preventing a space arms race. We are determined to push ahead with pro-active work along these lines geared to obtaining specific results.”

Zakharova warned that Washington could trigger the next evolution of the Cold War, however, this time, it could be in the heavens.

“For instance, take its wish to achieve monopoly on nuclear weapons,” she said.

“At a certain point, all this resulted in the toughest nuclear arms race and terrible escalation of tensions in the international scene. We are urging Washington to display common sense and avoid repeating mistakes made in the past.

“As for those who wish to know more about Russia’s military-space force, I’d like to stress that its nature is purely defensive,” Zakharova said. “Our country is not interested in tackling any tasks in space with the use of attack weapons.”.

Released on October 2017, the US Army’s Training and Doctrine Command, or TRADOC, drafted a new strategy for how US ground forces will operate, fight, and campaign successfully across multiple domains - space, cyberspace, air, land, maritime - against all enemies in the 2025-2040 timeframe.

As we mentioned in last year’s report, Washington is gearing up for decades of hybrid wars starting around 2025. So, President Trump’s executive order creating the sixth military branch [space force] comes as no surprise, as the build-up towards the next World War has undoubtedly startled Russia.

Published:6/23/2018 3:01:26 PM
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Published:6/23/2018 2:31:48 PM
[Markets] NJ Governor Pitches 2,400% Tax Increase On Firearms

New Jersey's Democratic Governor Phil Murphy is floating a plan to increase taxes on buying and selling guns by up to 2,400%, according to guns.com.

Murphy estimates that the state will take in an additional $2 million in revenue from the tax, which would include raising handgun purchase permits from $2 to $50, and firearms ID cards required to own a gun or buy ammunition from $5 to $100. Permits to carry a handgun would skyrocket from $50 to $400.

In comparison, neighboring Delaware and Pennsylvania charge fees for carrying of $65 and $20 respectively. 

Such taxes, of course, would disproportionately affect the poor - as rich gun owners can simply pay up for personal protection. Given that the average salary of a New Jersey armed security officer is $19.42 an hour, Murphy's plan puts those who need to carry for their jobs under increased financial burden. 

In a public signing ceremony for a six-pack of gun control measures last week, Murphy slammed what he characterized as the low fees of firearm licensing in New Jersey. “We must please responsibly increase the fees for gun licenses and handgun permits,” he said. “It’s long past time we did this. The last time these fees were increased was 1966.” -Guns

Gun dealers would also be affected by the change - with the cost of retail licenses to increase 10-fold from $50 to $500, while manufacturer licenses would jump from $150 to $1,500. The ATF charges similar fees of $200 and $150 respectively. 

Murphy has rolled back several pro-gun reforms backed by the outgoing Chris Christie (R) administration, while shutting out Second Amendment groups and repeatedly blaming the gun lobby for the state's violent crime. He's also appointed a "gun czar," attorney Bill Castner.

“Bill Castner will play an active role in enhancing the coalition and will help our administration to advance new common-sense gun measures and potential avenues for legal challenges to stop the scourge of gun violence,” said Murphy, adding “Leading the force for gun violence protection to build safer communities and protect families at the state level is of the utmost importance, and I am confident that Bill will generate ideas and solutions that will save lives.”

Murphy’s attorney general last week warned a number of gun parts makers they could face civil action for selling unfinished lowers and frames in the state and has been ordered by Murphy to publish a running “shame” list of firearm trace data. -Guns

So for those living in New Jersey and other states with high taxes on guns; the 2nd Amendment gives you the right to bear arms, if you're rich enough to pay for it.

Published:6/23/2018 2:02:25 PM
[Markets] To Avoid Collapse, Subway Hires Bain & Co. To "Prepare For Sale"

The accelerating demise of Subway, the world’s largest sandwich chain, will one day be just another case study of how to run a once-magnificent business empire into the ground, as Americans quickly abandon five-dollar footlongs.

The New York Post recently uncovered new knowledge about the 52-year old sandwich chain, which has been in a sales slump since 2016, has hired the infamous consultant Bain & Company to “professionalize operations and position the company for a future sale.”

You may remember in the 2012 presidential election cycle, the abundance of campaign ads focusing on former Republican presidential candidate Mitt Romney, who co-founded Bain & Company, detailing the firm’s destructive path of stripping companies of wealth.

The truth about Subway’s fate, well, the capitalist vultures who ‘eat the carcass’ of companies are circling above - waiting to dive into their next feast: footlongs.

Take, for example, the 2005 leverage buyout of Toys ‘R’ Us via Bain Capital, KKR & Co., and Vornado Realty Trust. It has been 13 years since the group of private equity firms loaded up on Toys “R” Us with debt to take it private; however, the plan did not work too well, and the company ceases to exist.

Toys ‘R’ Us filed Chapter 11 bankruptcy protection in the U.S. on September 2017, and at the end of 1Q18 — announced that U.S. operations of the company were, after 70 years, going out of business and liquidated all 735 locations across the country.

What do the world’s largest toy store and restaurant chain have in common? Well, you guessed it, likely similar fates as the walk down Wall Street is not so random, after all.

While neither Subway, nor Bain, would confirm the reports, the New York Post cites two Subway insiders who confirmed the news of a restructuring plan, then the eventual sale of the company.

The recent downturn in Subway has sparked internal feuds with management, along with many of its struggling franchises.

Last month, Chief Executive Suzanne Greco, the sister of Fred DeLuca, the co-founder of the company, retired after 45 Years.

Trevor Haynes was named interim CEO. The Post said Haynes is on a listening tour of stores and franchise owners across America.

“I think hiring Bain signifies that the board needs a professional business organization to give advice so it can change its downward trend,” one Subway insider said.

“They are running out of options that might positively impact the company.”

For the first time in its 52-years of operation, the company contracted in 2016, shuttering 359 US locations, which was the most significant retrenchment in its history. In 2017, the company closed another 800+ U.S. locations, as details emerged that some one-third of shops in the U.S. could be unprofitable.

Same-store sales in May 2018 declined 3 to 4 percent y/y, according to John Gordon of Pacific Management Consulting.

The story gets worse, as consumer traffic collapsed 25 percent from 2012 to 2017, stated a November 2017 internal Subway memo.

Subway insiders told the New York Post that a recent $4.99 foot-long sandwich promotion failed to attract new customers, which was seen as an uncreative last-ditch effort to stabilize rapidly declining sales. In return, the failed promotion severely cut the margins of franchisees, sources explained.

“It’s business as usual, $4.99 and no imagination,” the source added.

“The promotion doesn’t work well in my stores,” one New York store owner told the New York Post. The shop owner has closed four of 10 stores over the last couple of years.

Subway’s 10-person board is comprised of the founder’s two children, who do not want to run the day to day operations and would like to see the company stabilize before the eventual sale, the source said.

“This [hiring someone like Bain] should have been done when Fred was dying,” Gordon said. “The system is worse off now than it was three years ago.”

A Subway spokeswoman said: “The shareholders have expressed their intentions to the employees of the company that they are investing in the future of the company, committed to the company and have no intentions of selling.”

Brand and crisis expert Dan Hill warned there is no hope left in turning around the failing brand from past PR nightmares.

“Subway’s derailment is attributed to many factors including the face of their brand being convicted of child pornography,” Hill, CEO of Hill Impact says, adding that he believes “there may be no way to get its sales back to where they were,” but it will be interesting to see what Bain can do.

As mentioned above, Bain Capital has a knack for throwing large retailer chains into bankruptcy. While that does not seem imminent for Subway, the accelerated demise of the sandwich shop has now been confirmed, with Bain’s vultures circling above ready for the kill.

Published:6/23/2018 1:31:25 PM
[Markets] China Steps Up US Cyberattacks As Trade Tensions Worsen

Despite signing a "digital truce" with the US in 2015 that banned the hacking of private companies, China has been green-lighting plenty of cyberattacks on US defense contractors, along with other targets, lately. And given the rising trade tensions with the US, these types of attacks are only expected to increase, according to Wired. To wit, one state-funded group recently infiltrated a Navy contractor and stole hundreds of gigabytes of information about submarines and undersea weapons, that have by now likely been handed over to the Chinese military.

China

As one source told Wired, China has backed off on intellectual property theft, as it promised to do when it signed the treaty. But it has more than compensated for this by redoubling its efforts to acquire US military intelligence.

"China’s actually backed off quite a bit on intellectual property theft, but when it comes to military trade secrets, military preparedness, military readiness, satellite communications, anything that involves the US’s ability to keep a cyber or military edge, China has been very heavily focused on those targets," says David Kennedy, CEO of the threat tracking firm Binary Defense Systems, who formerly worked at the NSA and with the Marine Corps' signal intelligence unit. "And the US does the same thing, by the way."

Earlier this week, analysts from Symantec published their research tracking a series of attacks carried out by suspected Chinese hackers  between November 2017 and April. The researchers dubbed the group "Thrip" - and what they have discovered is deeply troubling. The group, which the Symantec analysts have monitored since 2013, has learned to "hide in plain site" by using prefab malware to infiltrate networks, and then manipulate administrative controls to press further without tripping any alarms. Using off-the-shelf tools makes the group harder to identify. Still, the Symantec team found evidence of intrusions at some telecoms firms in southeast Asia, a US geospatial imagery company, a couple of private satellite companies including one US firm, and a US defense contractor.

And in what was probably Symantec's most alarming discovery,  the researchers learned that the hackers had managed to obtain operational control of orbiting satellite, giving them the ability to "disrupt data flows" or the satellite's trajectory.

The researchers found evidence of intrusions at some southeast Asian telecom firms, a US geospatial imagery company, a couple of private satellite companies including one from the US, and a US defense contractor. The breaches were all deliberate and targeted, and in the case of the satellite firms the hackers moved all the way through to reach the control systems of actual orbiting satellites, where they could have impacted a satellite's trajectory or disrupted data flow.

"It is scary," says Jon DiMaggio, a senior threat intelligence analyst at Symantec who leads the research into Thrip.

"We looked at which systems they were interested in, where they spent the most time, and on the satellites it was command and control. And then they were also on the operational side for both the geospatial imagery and the telecom attacks."

We should all be concerned about the increase in hacking of defense contractors because, as one of Wired's sources explains, sometimes an escalation of digital attacks can precede an armed conflict.

"Hacking can be used as a sign of force in a lot of cases to say 'hey, we’re not happy and we’re going to make you feel some pain,'" Kennedy notes. "They'll use that as a first step instead of having to send fighter jets or something."

[...]

"All of these pieces fit together," Symantec's DiMaggio says of Thrip. "It’s not targets of opportunity; it’s definitely a planned operation."

Of course, China has many options for retaliating against the US as the trade war with President Donald Trump worsens, including the so-called nuclear option: Dumping its US Treasury holdings. China's military still lags the US in terms of firepower, but the government is quickly closing that gap, and its provocations in the South China Sea could cause the already tenuous relationship between the two countries to further deteriorate.

Published:6/23/2018 12:31:06 PM
[Entertainment] Game of Thrones' Kit Harington and Rose Leslie Are Married Rose Leslie, Kit Harrington, WeddingKit Harington and Rose Leslie's wedding isn't coming--it's officially here! The Game of Thrones actor, who plays Jon Snow, and his former co-star, who played his Wildling...
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[Entertainment] Jennifer Lopez and Alex Rodriguez's Daughter Natasha Dance to "Dinero" on a Boat Jennifer Lopez, Natasha, Alex Rodriguez, DaughterJennifer Lopez may have found herself a new backup dancer--her boyfriend Alex Rodriguez's teenage daughter, Natasha. In a video posted on the former New York Yankees star-turned...
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[Entertainment] Chip and Joanna Gaines Welcome Baby No. 5 Joanna Gaines, Chip Gaines, Fixer UpperThe Gaines family has expanded! Fixer Upper star Chip Gaines announced on Saturday that his wife and co-star Joanna Gaines gave birth to their fifth child. "And then there...
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[Entertainment] Saturday Savings: Bachelorette's Becca Kufrin's Open-Toe Booties Are $20 ESC: Rebecca KufrinIt's the most dramatic...price cut yet! On this season of The Bachelorette, Becca Kufrin kicked off her romance with a pair of boots that everyone needs for summer. The Minnesota...
Published:6/23/2018 8:29:39 AM
[Entertainment] DJ Khaled's Endless List of Star Collaborators Is Seriously Impressive DJ Khaled, Jennifer Lopez, John Legend, Rihanna, Music Collabs, GraphicMajor key alert! When it comes to his discography, DJ Khaled has worked with the best in the business. Ever since his debut studio album in 2006, the 42-year-old hip hop star has...
Published:6/23/2018 6:29:30 AM
[Entertainment] 10 Things We Learned About Ariana Grande and Pete Davidson's Relationship Through Social Media Ariana Grande, Pete Davidson The romance between Ariana Grande and Pete Davidson unfolded fast. And fortunately, we've been along for the ride. What started out as a casual fling soon turned into something more...
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[Entertainment] Vote for Your Favorite Male R&B/Pop Artist Ahead of the 2018 BET Awards The WeekndThe 2018 BET Awards are almost here! The award show airs tomorrow, June 24, and we can barely contain our excitement. Every year the BET Awards promise big names, great musical...
Published:6/23/2018 5:29:24 AM
[Markets] Presenting America's 20 Best And Worst Paying Jobs

While we fail to see any occupations listed for "insider trading hedge fund managers" or "high frequency market manipulators" in the recently released list by the BLS listing the number of workers and wages earned for all official US occupations, we supposed it will have to do, incomplete as it may be.

Below, sorted by average annual wage, are the Top 20 best paying jobs in the US including the average hourly wage and also showing the number of people the BLS believes are employed in each,  seasonally adjusted of course.

And here are the bottom 20, or worst-paying, US jobs. It is here the the minimum-wage debate is most acute... As is the debate just how motivated the workers in these 20 occupations really are.

Curious how many total workers are employed in the Top and Bottom 20 jobs according to the BLS? Here is the answer:

What may be more surprising is that while there are 6 times as many workers in the worst paid bucket as best-paid, the total compensation paid to the far smaller group of best paying jobs, is roughly 30% higher.

Moral of the story: Don't become line cooks, kids, unless of course when one adds up all the welfare and insolvent state benefits provided to line cooks, the after tax cash flow matches or beats that of anesthesiologists.

Published:6/22/2018 9:58:09 PM
[Markets] America's Military Drops A Bomb Every 12 Minutes, And No One Is Talking About It

Authored by Lee Camp via TruthDig.com,

We live in a state of perpetual war, and we never feel it. While you get your gelato at the hip place where they put those cute little mint leaves on the side, someone is being bombed in your name. While you argue with the 17-year-old at the movie theater who gave you a small popcorn when you paid for a large, someone is being obliterated in your name. While we sleep and eat and make love and shield our eyes on a sunny day, someone’s home, family, life and body are being blown into a thousand pieces in our names.

Once every 12 minutes.

The United States military drops an explosive with a strength you can hardly comprehend once every 12 minutes. And that’s odd, because we’re technically at war with—let me think—zero countries. So that should mean zero bombs are being dropped, right?

Hell no! You’ve made the common mistake of confusing our world with some sort of rational, cogent world in which our military-industrial complex is under control, the music industry is based on merit and talent, Legos have gently rounded edges (so when you step on them barefoot, it doesn’t feel like an armor-piercing bullet just shot straight up your sphincter), and humans are dealing with climate change like adults rather than burying our heads in the sand while trying to convince ourselves that the sand around our heads isn’t getting really, really hot.

You’re thinking of a rational world. We do not live there.

Instead, we live in a world where the Pentagon is completely and utterly out of control. A few weeks ago, I wrote about the $21 trillion (that’s not a typo) that has gone unaccounted for at the Pentagon. But I didn’t get into the number of bombs that ridiculous amount of money buys us. President George W. Bush’s military dropped 70,000 bombs on five countries. But of that outrageous number, only 57 of those bombs really upset the international community.

Because there were 57 strikes in Pakistan, Somalia and Yemen—countries the U.S. was neither at war with nor had ongoing conflicts with. And the world was kind of horrified. There was a lot of talk that went something like, “Wait a second. We’re bombing in countries outside of war zones? Is it possible that’s a slippery slope ending in us just bombing all the goddamn time? (Awkward pause.) … Nah. Whichever president follows Bush will be a normal adult person (with a functional brain stem of some sort) and will therefore stop this madness.”

We were so cute and naive back then, like a kitten when it’s first waking up in the morning.

The Bureau of Investigative Journalism reported that under President Barack Obama there were “563 strikes, largely by drones, that targeted Pakistan, Somalia and Yemen. …”

It’s not just the fact that bombing outside of a war zone is a horrific violation of international law and global norms. It’s also the morally reprehensible targeting of people for pre-crime, which is what we’re doing and what the Tom Cruise movie “Minority Report” warned us about. (Humans are very bad at taking the advice of sci-fi dystopias. If we’d listened to “1984,” we wouldn’t have allowed the existence of the National Security Agency. If we listened to “The Terminator,” we wouldn’t have allowed the existence of drone warfare. And if we’d listened to “The Matrix,” we wouldn’t have allowed the vast majority of humans to get lost in a virtual reality of spectacle and vapid nonsense while the oceans die in a swamp of plastic waste. … But you know, who’s counting?)

There was basically a media blackout while Obama was president. You could count on one hand the number of mainstream media reports on the Pentagon’s daily bombing campaigns under Obama. And even when the media did mention it, the underlying sentiment was, “Yeah, but look at how suave Obama is while he’s OK’ing endless destruction. He’s like the Steve McQueen of aerial death.”

And let’s take a moment to wipe away the idea that our “advanced weaponry” hits only the bad guys. As David DeGraw put it, “According to the C.I.A.’s own documents, the people on the ‘kill list,’ who were targeted for ‘death-by-drone,’ accounted for only 2% of the deaths caused by the drone strikes.”

Two percent. Really, Pentagon? You got a two on the test? You get five points just for spelling your name right.

But those 70,000 bombs dropped by Bush—it was child’s play. DeGraw again:

“[Obama] dropped 100,000 bombs in seven countries. He out-bombed Bush by 30,000 bombs and 2 countries.”

You have to admit that’s impressively horrific. That puts Obama in a very elite group of Nobel Peace Prize winners who have killed that many innocent civilians. The reunions are mainly just him and Henry Kissinger wearing little hand-drawn name tags and munching on deviled eggs.

However, we now know that Donald Trump’s administration puts all previous presidents to shame. The Pentagon’s numbers show that during George W. Bush’s eight years he averaged 24 bombs dropped per day, which is 8,750 per year. Over the course of Obama’s time in office, his military dropped 34 bombs per day, 12,500 per year. And in Trump’s first year in office, he averaged 121 bombs dropped per day, for an annual total of 44,096.

Trump’s military dropped 44,000 bombs in his first year in office.

He has basically taken the gloves off the Pentagon, taken the leash off an already rabid dog. So the end result is a military that’s behaving like Lil Waynecrossed with Conor McGregor. You look away for one minute, look back, and are like, “What the fuck did you just do? I was gone for like, a second!”

Under Trump, five bombs are dropped per hour - every hour of every day. That averages out to a bomb every 12 minutes.

And which is more outrageous—the crazy amount of death and destruction we are creating around the world, or the fact that your mainstream corporate media basically NEVER investigates it? They talk about Trump’s flaws. They say he’s a racist, bulbous-headed, self-centered idiot (which is totally accurate) - but they don’t criticize the perpetual Amityville massacre our military perpetrates by dropping a bomb every 12 minutes, most of them killing 98 percent non-targets.

When you have a Department of War with a completely unaccountable budget—as we saw with the $21 trillion—and you have a president with no interest in overseeing how much death the Department of War is responsible for, then you end up dropping so many bombs that the Pentagon has reported we are running out of bombs.

Oh, dear God. If we run out of our bombs, then how will we stop all those innocent civilians from … farming? Think of all the goats that will be allowed to go about their days.

And, as with the $21 trillion, the theme seems to be “unaccountable.”

Journalist Witney Webb wrote in February, “Shockingly, more than 80 percent of those killed have never even been identified and the C.I.A.’s own documents have shown that they are not even aware of who they are killing—avoiding the issue of reporting civilian deaths simply by naming all those in the strike zone as enemy combatants.”

That’s right. We kill only enemy combatants. How do we know they’re enemy combatants? Because they were in our strike zone. How did we know it was a strike zone? Because there were enemy combatants there. How did we find out they were enemy combatants? Because they were in the strike zone. … Want me to keep going, or do you get the point? I have all day.

This is not about Trump, even though he’s a maniac. It’s not about Obama, even though he’s a war criminal. It’s not about Bush, even though he has the intelligence of boiled cabbage. (I haven’t told a Bush joke in about eight years. Felt kind of good. Maybe I’ll get back into that.)

This is about a runaway military-industrial complex that our ruling elite are more than happy to let loose. Almost no one in Congress or the presidency tries to restrain our 121 bombs a day. Almost no one in a mainstream outlet tries to get people to care about this.

Recently, the hashtag #21Trillion for the unaccounted Pentagon money has gained some traction. Let’s get another one started: #121BombsADay.

One every 12 minutes.

Do you know where they’re hitting? Who they’re murdering? Why? One hundred and twenty-one bombs a day rip apart the lives of families a world away - in your name and my name and the name of the kid doling out the wrong size popcorn at the movie theater.

We are a rogue nation with a rogue military and a completely unaccountable ruling elite. The government and military you and I support by being a part of this society are murdering people every 12 minutes, and in response, there’s nothing but a ghostly silence. It is beneath us as a people and a species to give this topic nothing but silence. It is a crime against humanity.

*  *  *

If you think this column is important, please share it. Also, check out Lee Camp’s weekly TV show “Redacted Tonight” and weekly podcast “Common Censored.”

Truthdig is running a reader-funded project to document the Poor People’s Campaign. Please help us by making a donation.

Published:6/22/2018 8:57:36 PM
[Entertainment] Tristan Thompson Shares First Photo of His Kids Prince and True Thompson Together Tristan Thompson, True ThompsonTalk about a cute sibling moment! Cleveland Cavaliers player Tristan Thompson posted an adorable Instagram series Friday afternoon of himself and his two kids--18-month-old Prince...
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[Markets] Strzok Subpoenaed, Must Appear Before Congress In Five Days

FBI special agent Peter Strzok is having a very bad June. After being physically escorted out of his FBI office last Friday and losing his security clearance this week, per Attorney General Jeff Sessions, the anti-Trump "lovebird" has been subpoenaed by House Judiciary Committee Chairman Bob Goodlatte (R-IA).

Strzok agreed to testify earlier, however Grassley issued the subpoena to appear on June 27 at 10:00 a.m. after the FBI agent would not commit to a date.  

Strzok, was in charge of both FBI investigations into both Hillary Clinton and Donald Trump, harbored extreme animus towards the latter - as revealed within a batch of 50,00 text messages he sent to his mistress - FBI attorney Lisa Page, including one in which Strzok says he will stop Trump from becoming President.

Special counsel Robert Mueller removed Strzok from his investigation into Russia's election meddling after the texts were discovered - many of which contained overt bias against then candidate Donald Trump and for Hillary Clinton, which was documented in a DOJ Inspector General report released last week. 

While Strzok's career at the FBI now finally appears over (with possible disciplinary consequences to follow), many questions remain including some revelations made later in day by the Inspector General Horowitz, who during a hearing on Tuesday said that he's no longer convinced the FBI was collecting all of Strzok's and Page's text messages even outside the 5-month blackout period when it archived none of the texts due to a technical "glitch", which means a number of other Strzok responses to Page are likely missing.

Maybe Grassley will get to the bottom of that and much, much more...

We are excited for the questioning to begin...

Published:6/22/2018 7:26:32 PM
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[Markets] Jordan Sends Tanks To Border Amidst Syrian Army Advance

Images surfaced overnight Thursday of a large Jordanian military convoy reportedly headed to the border near the Syrian province of Daraa, including M-60 battle tanks and heavy military equipment. 

This as German Chancellor Angela Merkel met with Jordan’s King Abdullah in Amman on Thursday, telling him, "You live not just with the Syria conflict, but also we see Iran’s activities with regard to Israel’s security and with regard to Jordan’s border.” 

Beirut based Al Masdar News published the photos provided through its sources in the region with the description: The Jordanian military is deploying reinforcements, including heavy military equipment, on the border with the Syrian province of Daraa, according to Jordanian and Syrian sources.

A Jordanian M-60 battle tank en route to border with Syria. Via Al Masdar News

As we reported this week, the long awaited battle for Daraa has begun despite repeat warnings issued to the Syrian government from the US not to extend its military campaign to the country's south, where the conflict first began with fierce anti-Assad protests in 2011 which quickly spiraled into violence. 

The convergence of geopolitical interests among the external and regional powers which have long fueled the Syrian proxy war makes Syria's southwest region the perfect storm for potential outside intervention and dangerous broader conflagration.

The below summarizes this week's developments which makes the rapidly unfolding events in Syria's southwest provinces a highly volatile and escalating situation:

  • Israel has warned against the deployment Iranian and Hezbollah fighters allied with the Syrian government, especially near the contested Golan Heights area. 
  • The US has threatened to take "take firm and appropriate measures" should Damascus continue its military campaign in Deraa.
  • The Syrian Army and the US-backed group, Jaysh Al-Mughawir Al-Thoura from the Al-Tanf area clashed on Thursday, leaving one Syrian soldier dead.
  • Jordan's King Abdullah has joined Israel in denouncing Iran's "meddling" in the region, and met this week with Israeli PM Netanyahu in the first public meeting between the two leaders since 2014. 
  • King Abdullah also met this week with German Chancellor Angela Merkel and discussed countering "Iranian aggression".
  • Israel attacked (or possibly US coalition) Syrian Army and Iraqi paramilitary forces near the Iraq-Syria border on Sunday, killing over 40 pro-Syrian and allied fighters.
  • Assad has vowed to liberate "every inch" of sovereign Syrian territory and sees the return of Al-Quneitra and Daraa governorates to the government as key to ending Israeli and other outside meddling, including an ISIS pocket which lies adjacent to Israel and Jordan. 
  • Huge Syrian military convoys have been seen entering the southwest provinces, preparing for a final major offensive. 
  • Jordan has sent reinforcements to its border opposite Daraa to both ensure fleeing militants don't penetrate into Jordanian territory and in support of the US coalition desire to "counter Iran". 

Beirut-based Al Masdar News published the photos provided through its sources in the region.

Meanwhile, thousands of civilians in the region are reportedly fleeing toward the Jordanian and Israeli borders as clashes in the northern part of Daraa province have begun. 

* * *

Notably ISIS has long maintained a stronghold along the Israeli occupied Golan Heights and Jordanian border  something which Israeli leadership and media are all too aware of and appear to have turned a blind eye to.

Western media has increasingly acknowledged Israel's "not so secret" quiet support to jihadists along the Golan border, with even the Wall Street Journal confirming weapons transfers and medical aid given to al-Qaeda insurgents.  

Israel, the US, and Jordan have made "countering Iran" in Syria and the region their top priority, and not ISIS. Israeli media has claimed to be in possession of on the ground footage of ISIS terror training camps just across the Israeli border. 

PM Netanyahu and Israel's military leadership have long been on record as advancing a policy of "let the Sunni evil prevail" in reference to seeing ISIS and al-Qaeda [Sunni] terrorism as the "lesser evil" when compared to Shia Iran and Hezbollah. 

Map of the current military situation in southwest Syria, including ISIS positions along the Jordanian border and Israeli occupied Golan:

Footage showing overnight clashes in south Syria:

Published:6/22/2018 5:57:48 PM
[Entertainment] Nick Jonas and Priyanka Chopra Have a Date Night in India Nick Jonas, Priyanka ChopraNick Jonas and Priyanka Chopra are still going strong! So strong, in fact, that the Quantico actress and the "Jealous" singer just flew to India together. New photos show the...
Published:6/22/2018 5:26:40 PM
[Entertainment] Radio Disney Music Awards 2018 Red Carpet Arrivals: See Meghan Trainor, Charlie Puth and More Stars Meghan Trainor, 2018 Radio Disney Music AwardsThe 2018 Radio Disney Music Awards are here! Stars are starting to arrive at the award show, taking place at the Dolby Theatre in Hollywood. Before heading inside to the ceremony, the...
Published:6/22/2018 4:56:51 PM
[Markets] Rickards Warns 'A New Global Debt Crisis Has Begun'

Authored by James Rickards via The Daily Reckoning,

Emerging-market debt crises are as predictable as spring rain. They happen every 15–20 years, with a few variations and exceptions.

In recent decades, the first crisis in this series was the Latin American debt crisis of 1982–85. The combination of inflation and a commodity price boom in the late 1970s had given a huge boost to economies such as Brazil, Argentina, Chile, Mexico and many others, including countries in Africa.

This commodity boom enabled these emerging-market (EM) economies to earn dollar reserves for their exports. (By the way, we didn’t call them “emerging markets” in the 1980s; they were the “Third World” after the Western world and the communist world.)

These dollar reserves were soon supplemented with dollar loans from U.S. banks looking to “recycle” petrodollars that the OPEC countries were putting on deposit after the oil price explosion of the 1970s.

I worked at Citibank from 1976–1985 during the height of petrodollar recycling and even discussed the process personally with Walter Wriston, Citibank’s legendary CEO. In the 1960s, Wriston invented the negotiable eurodollar CD, which was later critical to funding those EM loans.

Wriston is considered the father of petrodollar recycling once the petrodollar was created by Henry Kissinger and William Simon under President Nixon in 1974. I remember those days extremely well. The bank made billions and our stock price soared. It was a euphoric phase and a great time to be an international banker.

Then it all crashed and burned. One by one, the lenders defaulted. They had squandered their reserves on vanity projects such as skyscrapers in the jungle, which I saw firsthand when I visited Kinshasa on the Congo River in central Africa. Most of what wasn’t wasted was stolen and stashed away in Swiss bank accounts by kleptocrats.

Citibank was technically insolvent after that but was bailed out by the absence of mark-to-market accounting. We were able to pretend the loans were still good as long as we could refinance them or roll them over in some way. Citibank has a long and glorious history of being bailed out, stretching from the 1930s to the 2010s.

After the defaults, the reaction set in. Emerging markets had to flip to austerity, devalue their currencies, cut spending, cut imports and gradually rebuild their credit. There was a major EM debt crisis in Mexico in 1994, the “Tequila Crisis,” but that was contained by a U.S. bailout led by Treasury Secretary Bob Rubin. On the whole, the EMs used the 1990s to rebuild reserves and restore their creditworthiness.

Gradually, the banks looked favorably on this progress and new loans started to pour in. Now the target of bank lending was not Latin America but the “Asian Tigers” (Singapore, Taiwan, South Korea and Hong Kong) and the “mini-tigers” of South Asia.

The next big EM debt crisis arrived right on time in 1997, 15 years after the 1982 Latin American debt crisis. This one began in Thailand in June 1997.

Money had been flooding into Thailand for several years, mostly to build real estate projects, resorts, golf courses and commercial office buildings. Thailand’s currency, the baht, was pegged to the dollar, so dollar-based investors could get high yields without currency risk.

Suddenly a run on the baht emerged. Investors flocked to cash out their investments and get their dollars back. The Thai central bank was forced to close the capital account and devalue their currency, forcing large losses on foreign investors.

This sparked fear that other Asian countries would do the same. Panic spread to Malaysia, Indonesia, South Korea and finally Russia before coming to rest at Long Term Capital Management, LTCM, a hedge fund in Greenwich, Connecticut.

I was chief counsel to LTCM and negotiated the rescue of the fund by 14 Wall Street banks. Wall Street put up $4 billion in cash to prop up the LTCM balance sheet so it could be unwound gradually. At the time of the rescue on Sept. 28, 1998, global capital markets were just hours away from complete collapse.

Emerging markets learned valuable lessons in the 1997–98 crisis. In the decade that followed, they built up their reserve positions to enormous size so they would not be disadvantaged in another global liquidity crisis.

These excess national savings were called “precautionary reserves” because they were over and above what central banks normally need to conduct foreign exchange operations. The EMs also avoided unrealistic fixed exchange rates, which were an open invitation to foreign speculators like George Soros to short their currencies and drain their reserves.

These improved practices meant that EMs were not in the eye of the storm in the 2007–08 global financial crisis and the subsequent 2009–2015 European sovereign debt crisis. Those crises were mainly confined to developed economies and sectors such as U.S. real estate, European banks and weaker members of the eurozone including Greece, Cyprus and Ireland.

Yet memories are short. It has been 20 years since the last EM debt crisis and 10 years since the last global financial crisis. EM lending has been proceeding at a record pace. Once again, hot money from the U.S. and Europe is chasing high yields in EMs, especially the BRICS (Brazil, Russia, India, China and South Africa) and the next tier of nations including Turkey, Indonesia and Argentina.

As Chart 1 and Chart 2 below illustrate, we are now at the beginning of the third major EM debt crisis in the past 35 years.

Chart 1 measures the size of hard-currency reserves relative to the number of months of imports those reserves can buy. This is a critical metric because emerging markets need imports in order to generate exports. They need to buy machinery in order to engage in manufacturing. They need to buy oil in order to keep factories and tourist facilities operating.

Chart 1 shows how many months each economy could pay for imports out of reserves if export revenue suddenly dried up.

Chart 2 shows the gross external financing requirement, GXFR, of selected countries calculated as a percentage of total reserves. GXFR covers both maturing debt denominated in foreign currencies (including dollars and euros) and the current account deficit over the coming year.

Both charts reflect a crisis in the making.

The hard-currency import coverage for Turkey, Ukraine, Mexico, Argentina and South Africa, among others, is less than one year. This means that in the event of a developed-economy recession or another liquidity crisis where demand for EM exports dried up, the ability of those EMs to keep importing needed inputs would be used up quickly.

Chart 2 has even more disturbing news. Turkey’s maturing debt and current account deficit in the year ahead is almost 160% of its available reserves. In other words, Turkey can’t pay its bills.

Argentina’s ratio of debts and deficits to reserves is over 120%. The ratio for Venezuela is about 100%, and Venezuela is a major oil exporter.

These metrics don’t merely forecast an EM debt crisis in the future. The debt crisis has already begun.

Venezuela has defaulted on some of its external debt, and litigation with creditors and seizure of certain assets is underway. Argentina’s reserves have been severely depleted defending its currency, and it has turned to the IMF for emergency funding.

Ukraine, South Africa and Chile are also highly vulnerable to a run on their reserves and a default on their external dollar-denominated debt. Russia is in a relatively strong position because it has relatively little external debt. China has huge external debts but also has huge reserves, over $3 trillion, to deal with those debts.

The problem is not individual sovereign defaults; those are bound to occur. The problem is contagion.

History shows that once a single nation defaults, creditors lose confidence in other emerging markets. Those creditors begin to cash out investments in EMs across the board and a panic begins.

Once that happens, even the stronger countries such as China lose reserves rapidly and end up in default. In a worst case, a full-scale global liquidity crisis commences, this time worse than 2008.

A full-blown EM debt crisis is coming soon. It is likely to start in Turkey, Argentina or Venezuela, but it won’t end there.

The panic will quickly affect Ukraine, Chile, Poland, South Africa and the other weak links in the chain.

The IMF will soon run out of lending resources and will have to pass the hat among the richer members. But the Europeans will have their own problems, and the U.S. under President Trump is likely to reply, “America First,” and decline to participate in bailing out the EMs with U.S. taxpayer funds.

At that point, the IMF may have to resort to printing trillions of dollars in special drawing rights (SDRs) to reliquify a panicked world. SDRs are essentially world money. Elites are working behind the scenes to ultimately replace the dollar with SDRs as the leading reserve currency.

A new crisis will bring that goal one step closer to reality.

Published:6/22/2018 4:56:51 PM
[Markets] WaPo Refuses To Cover Amazon's Horrendous "Pee Bottle" Warehouse Conditions

The Washington Post - founded in 1877 and boasting 47 Pulitzer prizes - including one for its groundbreaking reporting the Watergate scandal, can't seem to find a single journalist to cover the deplorable working conditions at sister company Amazon's warehouses - as noted by the Daily Caller's Joe Simonson.

In the case of WaPo’s coverage, there exists one growing controversy that has remained conspicuously uncovered: the conditions of Amazon’s workplace.

Such conditions have been covered extensively in the mainstream press. A number of Amazon’s warehouse workforce has long complained about abusive conditions, with one reporter who went undercover as a warehouse worker for six months comparing it to a stint in prison. -Daily Caller

Ironically, over 400 Washington Post employees have signed a public petition to owner Jeff Bezos begging him to improve working conditions and poor pay at the newspaper, following over a year of unsuccessful negotiations with upper management.

Why wouldn't a news organization owned by billionaire Jeff Bezos report on abusive working conditions at another organization owned by Jeff Bezos? Sorry, that was rhetorical - but the lack of coverage calls WaPo's journalistic credibility into question given the well documented abuses in Amazon warehouses. 

In 2011, the brutal work environment at an Amazon warehouse in Breinigsville, Pennsylvania were reported in the Morning Call.

Working conditions at Amazon's Lehigh Valley shipping hub gained national attention and a public response from the company after a Sept. 18 article in The Morning Call revealed employee complaints about heat in the warehouse complex and rapid production requirements many could not sustain. Amazon hired ambulance crews to park outside the complex on hot summer days in case workers experienced heat-related problems. A local emergency room doctor who treated Amazon workers for heat stress reported an "unsafe environment" to the Occupational Safety and Health Administration, which inspected and recommended corrective steps. -Morning Call.

In 2012, the Seattle Times published a blockbuster report about overworked, underpaid staff who were encouraged to lie about workplace injuries to avoid having to file reports

Three former workers at Amazon’s warehouse in Campbellsville told The Seattle Times there was pressure to manage injuries so they would not have to be reported to OSHA, such as attributing workplace injuries to pre-existing conditions or treating wounds in a way that did not trigger federal reports.

“We had doctors who refused to work with us because they would have managers call and argue with them,” he said.

-Seattle Times

In 2015, the New York Times revealed that conditions at Amazon headquarters are cutthroat. 

“Nearly every person I worked with, I saw cry at their desk.” -Bo Olson

And in April of this year, journalist and author James Bloodworth reported what he saw after going undercover at an Amazon warehouse in Staffordshire, UK, where he found horrendous conditions in which some workers are forced to pee in bottles

The warehouse measures 700,000 sq ft and some of the 1,200 workers face a ten minute, quarter-of-a-mile walk to two toilets on the ground floor of the four-storey building.

Undercover investigator James Bloodworth said: "For those of us who worked on the top floor, the closest toilets were down four flights of stairs."

Mr Bloodworth, who worked ten-hour shifts as a picker selecting goods for despatch, walked ten miles a day in the job to research for a book on low-wage Britain.

He claimed workers were continually monitored for time wasting by supervisors.

It meant workers operated a “toilet bottle” system.

Mr Bloodworth said: "People just peed in bottles because they lived in fear of being ­disciplined over ‘idle time’ and ­losing their jobs just because they needed the loo." -The Sun

“I’ve worked in warehouses before, but this was nothing like I had experienced. You don’t have proper breaks — by the time you get to the canteen, you only have 15 or 20 minutes for lunch, in a 10-1/2-hour working day. You don’t have time to eat properly to get a drink,” Bloodworth told Business Insider.

Maybe all the WaPo reporters are afraid they'll get fired like several Newsweek employees who were investigating and reporting on their parent company's fraudulent practices? 

Published:6/22/2018 3:55:45 PM
[Markets] Crude Crescendo Helps Dow Beat Longest Losing Streak In 40 Years

If you own Netflix alone in your portfolio - everything is awesome in the world - if you own anything else, not so much...

Spot the odd one out...Nasdaq (green) vs World Stocks ex-US, the UST yield curve, EM FX, SIFIs, and Global Macro data...

 

China was ugly this week...

Emerging Markets ugly across all asset classes...

DAX ended the week ugly - Trump trade tariffs on autos - but FTSE managed to end with a gain...

Heavy volume in US markets on the Russell rebalance today.

Since Fed Day, The Dow is down around 3% and Nasdaq and Small Caps up around 1% (losing some ground the last two days)

On the day, S&P and Dow managed gains - flipping the script on the week...ugly close into the rebalance.

On the week in stocks:

  • Dow's worst week in 3 months (ends 8-day losing streak, worst in 40 years)

  • Trannies' worst week in 3 months

  • S&P worst week since early April

  • Nasdaq ended the week lower - first down week in a month

  • Small Caps up (barely) for 8th week in a row

Here's the culprit for the tech wreck - Red Hat missed... (biggest drop since Oct 2006)

"Most Shorted" Stocks up for the 8th time in the last 9 weeks... (the biggest short-squeeze ever)...

 

But it has paused a little the last two days (but we've seen this before)...

 

NYSE FANG+ Stocks ended the week lower - first down week in a month - even with dip-buyers scrambling in every day...

 

After a four week melt-up short-squeeze, Tesla stocks and bonds tumbled this week...

 

Mixed bag in US banks this week with Citi up and the rest down... (all lower after last night's stress test)

 

A roller-coaster week for financials relative to tech that ended with the two unchanged relative to each other...

 

Unusual action in bonds this week. All Treasury yields ended the week lower but the belly notably outperformed the wings..

The curve flattened very modestly on the week.

This is the lowest weekly close for the 10Y Yield (and first below 2.90%) since April...

 

The Dollar Index fell the most in almost three months this week (after last week's best gains since the US election after the ECB)

 

Yuan weakened the most as JPY strengthened on the week...

 

In fact - ever so quietly - Yuan has devalued by 4.5% from its highs of the year (which were very similar to the last devaluation level)...

 

Another down week for cryptos - led by an 11% plunge in Litecoin - after Japanese regulatory crackdown sparked selling overnight...

 

PMs were very modestly lower on the week (with a weaker dollar?) but copper was clubbed on trade tensions and crude exploded on OPEC...

 

WTI Crude soared over 5% today - the biggest single-day surge since the OPEC meeting in Nov 2016... (though notably still 6% below the May highs)...

 

Silver continues to outperform gold after last week's collapse...

 

Published:6/22/2018 3:25:33 PM
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Published:6/22/2018 2:58:01 PM
[Markets] Despite 'Recovery', Millennials Face Future Of Less Wealth, More Work, Worse Health

While many baby boomers and those of older generations have experienced rising "wealth and prosperity" as a result of this most recent "recovery" that has taken place over the last decade, there has been an age group that has not reaped such benefits, but will yet be stuck with the residual damage that comes with a Keynesian recovery in the years to come: millenials. Bloomberg recently reported as such:

Just two years ago, the median American born in the 1980s—the cradle of millennials—had family wealth that was 34 percent below what earlier generations held at the same age, the Federal Reserve Bank of St. Louis reported last month. And all the data show it’s probably going to get worse.

As affluent baby boomers thank years of soaring markets for their paid-off mortgages and plump portfolios, millennials and the next cohort, Generation Z, are weighed down by student debt and stagnant wages. They can only contribute the bare minimum to their retirement plans and struggle to find affordable homes within commuting distance of their jobs.

Of course, it’s perfectly normal for people just starting out to have less in the bank. However, the St. Louis Fed warned that, even when taking that into account, young Americans are slipping dangerously behind. For a time, Generation X was also losing out, thanks to the 2008 financial crisis. But its members managed to make up most of the shortfall in the years since, tapping into the longest economic expansion in decades.

For some reason that period of tremendous growth barely helped millennials. The St. Louis Fed called this anomaly “a missed opportunity because asset appreciation is unlikely to be as rapid in the near future.” That’s pretty bad news for twenty and thirtysomethings who may have been hoping to catch up. But it gets worse.


Of course it should come as no surprise to anybody who’s been paying attention that the engineered "recovery" of the last 10 years will ultimately be doing more harm than good in the years to come. A whole new set of bubbles has popped up, debt levels across the board are at or exceeding levels they were at in 2008 and once again, it is almost time to pay the piper. Except the piper will not be paid by baby boomers and older generations this time, but rather by millennials who were unable to take advantage of the recent economic expansion - but yet will have to deal with its after effects in coming years.

This already comes on top of a slew of problems that millennials will have to deal with because of their age. The first of which is the fact that the Social Security program will be insolvent in less than two decades and that any solutions to fix this program will likely result in higher taxes and less benefits paid. Despite this, millennials have been paying into this program.

Bloomberg recently highlighted the social security issue - and its proposed resultant solution - as well:

By 2034, Social Security won’t be able to pay out full benefits, the program’s trustees estimated this month. Any solution that would rectify its finances will probably require more taxes and more benefit cuts—all coming out of the pockets of younger workers. Boomers, who are exiting the workforce in droves, will already be comfortably seated when the music stops, or out of the picture.

Fixing Social Security is hardly the only issue where younger Americans have different priorities than their elders. U.S. President Donald Trump was elected on the votes of older Americans favoring tax cuts and less government, while young voters flocked to Senator Bernie Sanders, who supports rebuilding social programs and establishing national healthcare.  

Alicia Munnell, the director of Boston College’s Center for Retirement Research, recently lamented that government inaction on Social Security means “that most baby boomers have escaped completely from contributing to a solution.” This month, she offered some depressing advice to younger Americans about what they can do to make up the difference: Work longer.

...

Ouch. But Munnell assured young people that they don’t need to cancel their retirements entirely. “In fact, my research shows that the vast majority of millennials will be fine if they work to age 70,” she wrote for Politico. (Small solace given that life expectancy for Americans recently took a turn for the worse.)

Also, one of the variables that has had to give way as a result of the economic crunch being put on the middle class is the average retirement age. People are now working longer and retiring later on in life. This metric can only be pushed so far and will also eventually have to give away. Bloomberg reported on this:

Retirement-age Americans are already working in record numbers. Whether by choice or necessity, because of boredom or fear, a full third of those between 65 and 69 were in the workforce in May, according to the Bureau of Labor Statistics, along with 19 percent of those aged 70 to 74—together almost double the number 30 years ago. 

Nevertheless, the retirement advice of “just work longer” can sound pretty tone deaf to younger ears, especially when the old American promises—of advancement, financial security and home ownership for everyone who works hard—have faded into myth. 

What about the booming economy of 2018? Won’t that help smooth the path for young savers? Perhaps, but Goldman Sachs Group Inc. economists recently said the current pace of the U.S. economy is “probably as good as it gets.” That can only make young Americans more furious about the “missed opportunity” mentioned by the St. Louis Fed.

But, as Bloomberg states, you have to live longer in order to be able to manipulate this variable to keep things status quo. And this isn't necessarily a guarantee. Bloomberg wrote:

Wide swaths of the country are getting sicker and dying younger than just a few years ago, with a widening health gap between educated, affluent Americans and everyone else. Alcohol abuse and obesity, upticks in suicide and an epidemic of drug overdoses have all played a role in an ominous milestone: Year-over-year declines in American life expectancy while the rest of the world lives ever-longer.

The article also pointed out the disturbing lack of cash access that younger generations have and the "inability to save any money at all":

Paychecks aren’t reflecting the improving economy. Hourly wages were unchanged in May from a year earlier. And according to a Fed survey, four in 10 Americans said it would be tough to come up with $400 for an emergency expense. The same 2017 survey found 27 percent skipping medical treatments because they can’t afford them. Another poll this month reaffirmed the inability of many Americans to save any money at all.

The only solution for millenials, it seems, is to hit the polls and vote in numbers, where they have their only advantage:

It’s no secret the widening gap in financial security is shadowed by a similar gap in politics, setting up the potential for generational warfare at the ballot box in coming elections.

The outcome of the 2018 midterms may largely come down to whether left-leaning millennials and Gen-Xers, who make up a majority of eligible U.S. voters, show up. In recent elections, these two demographics voted at much lower rates than previous generations at the same ages, according to the Pew Research Center. Unless that changes, wealthier, right-leaning baby boomers and the remaining members of the so-called Silent Generation will once again swamp them at the polls.

What will it take for us to learn that when you engineer a recovery and game the system in order to give the illusion of wealth and prosperity, it should come as no surprise that not just millennials, but everybody, will lose in the long run. If this is how dire things have become now, in the middle of this “recovery", how bad things get in the years to come?

Published:6/22/2018 2:58:01 PM
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Published:6/22/2018 2:25:33 PM
[Markets] Are You Prepared To Invest In Troubled Times?

Authored by Charles Hugh Smith via OfTwoMinds blog,

Market "fixes" fuel wealth/income inequality which feeds political and social instability.

There are two Grand Narratives about the U.S. economy and asset markets: the mainstream narrative is that nothing is fundamentally wrong with the economy, and so no structural changes (and the sacrifices such changes entail) are needed.

In this narrative, the only problem that needs solving is markets stop bubbling higher. The mainstream always expects markets to keep bubbling higher essentially forever, but reality intrudes and the asset bubbles pop.

The solution in this narrative is to "fix" markets with massive stimulus: fiscal stimulus from the Savior State and monetary stimulus from the central bank -- Federal Reserve (reinflating bubbles that enrich the already-wealthy is our primary job).

I've marked up a chart of the S&P 500 stock index to reflect this narrative:

Note that the mainstream never expects bubbles to deflate. The economy is always doing great at the bubble top, and expectations are always that assets will consequently continue bubbling higher.

Then there's a horrendously unexpected crash. The status quo panics, and the Federal Reserve and the Savior State rush to provide massive stimulus--tax cuts, tax rebates, more federal spending, lower interest rates, bond buying, easier lending standards, increased liquidity, and so on.

Asset prices respond to these constant injections of uppers very predictably:they leap higher as participants realize the "Fed put" is in place: the central bank will not let markets decline, so the profitable strategy is "buy the dip."

Note that the quantity of stimulus required to "fix" the markets increases exponentially every bubble-pop. Where a sharp decline in interest rates and conventional monetary stimulus stopped the 2002 crash in its tracks and reinflated asset bubbles, the next bubble-pop crash in 2008-09 required an unprecedented range of unconventional stimulus to stop the crash and reinflate the era's third asset bubble: zero interest rates (never done before), $4 trillion in bond and mortgage purchases (never done before), ending mark-to-market pricing of financial instruments (never done before) and unlimited liquidity to the banking sector and financial markets (never done before).

And so here we are again, at the top of a monumental parabolic blow-off top in stock markets and bubbles in other asset classes such as bonds and real estate.

And once again, the mainstream expects the bubble to keep rising. Doesn't it strike you as a bit insane to keep inflating unprecedented bubbles after the previous bubbles popped, and expect this new bubble to never pop?

The alternative Grand Narrative is the economy has changed and the problems are systemic: "fixing" the markets (i.e. using markets as signaling devices) doesn't address what's structurally broken; it simply increases the eventual pain when "fixes" fail the next time.

I hate to break this to you, but parabolic blow-off top bubbles burst, with catastrophic consequences for everyone who believed bubbles never pop and everyone who placed their capital in the hands of Wall Street and the conventional financial sector.

We are entering troubled times. The opportunity to address what was broken 10 years ago has been squandered by the status quo's reinflation of an even larger bubble as the "fix" to the bursting of the last bubble.

The question for individual investors is: are you prepared to invest in troubled times? Put another way: are you ready to entrust your wealth to Wall Street via passive investments in stock indices and funds that are betting that Netflix, which just doubled in a few months, will double again from $400 to $800 and then double again from $800 to $1,600 because the global demand for lousy movies is limitless and there's no real competition for streaming lousy movies?

Investing in troubled times boils down to one thing: control of your capital.Give the control of your capital to others, and you'll get what deflating bubbles deliver. Take control of your capital, and other possibilities emerge.

I wrote a book about taking control of one's capital, An Unconventional Guide to Investing in Troubled Times, and since we're entering troubled times, I've put the book on sale this month: $2.99 for the Kindle (digital) edition, and $9.95 for the print edition (a 50% discount).

Read the intro and chapter One for free here.

And let's not forget the consequence of "fixing" markets rather than addressing fundamental imbalances: Market "fixes" fuel wealth/income inequality which feeds political and social instability.

*  *  *

SUMMER BOOK SALE through June 30, 2018:

22% discount on Inequality and the Collapse of Privilege and Why Our Status Quo Failed and Is Beyond Reform

Kindle edition now $2.99, print edition now $6.95.

50% discount on An Unconventional Guide to Investing in Troubled Times

Kindle edition now $2.99, print edition now $9.95.

My new book Money and Work Unchained is $9.95 for the Kindle ebook and $20 for the print edition. Read the first section for free in PDF format. If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

Published:6/22/2018 2:25:32 PM
[Entertainment] Kim Kardashian Says Her Kids "Have No Clue" She's Famous Kim Kardashian, North West, Saint West, Chicago WestKim Kardashian might be one of the most famous celebrities in the world, but to her kids, she's just a mom. The Keeping Up With the Kardashians star opened up about fame and family...
Published:6/22/2018 1:55:07 PM
[Entertainment] Kim Kardashian Reflects on Her First Trip to Paris Since 2016 Robbery: "I Feel Calm" Kim Kardashian Kim Kardashian has felt it, gone through it and now she's moving on. In accordance with her self-prescribed philosophy, the reality star practiced what she preached when she returned...
Published:6/22/2018 1:24:53 PM
[Entertainment] Imagine Dragons' Dan Reynolds on HBO doc, and why he's no longer embarrassed to be Mormon Imagine Dragons singer Dan Reynolds wrestles with his Mormon faith and the church's stance on same-sex relationships in timely HBO documentary 'Believer.'
     
 
 
Published:6/22/2018 12:54:57 PM
[Entertainment] How Khloe Kardashian Is Rebuilding Her Relationship With Tristan Thompson: Date Nights, Gym Time and Doting on Baby True Khloe Kardashian, Tristan ThompsonKhloe Kardashian loves her workouts--but she doesn't love working out with just anybody. Boyfriend Tristan Thompson eventually became one of her favorite people to lunge and lift...
Published:6/22/2018 12:54:57 PM
[Markets] 897 Square Feet Palo Alto Bungalow Listed For $2.6 Million

It may be less than 900-square-feet, but a charming bungalow just a short walk to all of downtown in Palo Alto, California has listed for a whopping $2.6 million - a prime example of the housing affordability crisis ravaging many neighborhoods in California and beyond.

At 897 square feet, that translates to more than $2,800 per square foot - an astonishing number expected of a luxury penthouse in New York City and or Miami.

According to the Zillow, the bungalow was recently remodeled with “spacious” two bedrooms and a “large” living room with a modern ktchen.

There is even a converted garage (200sf+/-) with skylights & french doors where Facebook or Tesla employee(s) would be more than willing to rent the space for a few thousand dollars per month, which would cover about 20 percent of the $10,000 estimated mortgage per month for the bungalow.

“If you look globally, London has remained strong. New York has remained strong. We have a lot here. We have people coming in from all over the world,” McCarthy told CBS San Francisco.

Median home price in the U.S. grew 8.7 percent in April, for a y/y increase to $215,600, Zillow reported last month. To gain perspective of the bubbly real estate market in Palo Alto, consider the median home price is $2,900,000 — that is roughly 13.5 times higher than the average median home somewhere in middle America.

Talk about an uneven economy…

The living room of this $2.6 million, 900-square-foot home in Palo Alto, California. (Source: Zillow)

As home prices continue to rise, the kitchen of this $2.6 million bungalow in Palo Alto, California is tiny with an original stove from the 1920s. (Source: Zillow)

The master bedroom of the $2.6 million bungalow in Palo Alto, California. (Source: Zillow) 

What a $2.6 million backyard looks like in Palo Alto, California. (Source: Zillow) 

Several large cracks in the cement driveway. (Source: Zillow) 

McCarthy said the region had a very robust spring — and in her view: “isn’t showing signs of slowing.”

“If the price tag sounds far-fetched, consider that a house down the street was originally listed for $1.8 million and recently sold for nearly $2.25 million — and it was uninhabitable. And when you look outside this bubble, it’s really crazy. But this is reality for here,” McCarthy said.

So in McCarthy’s professional view: residential real estate in Palo Alto is a “bubble.”

The party in Palo Alto is likely in the later innings, particularly after the Federal Reserve raised its key interest rate by 0.25 percent last week.

Citing robust growth and a “generational low in unemployment”, Federal Reserve Chairman Jerome Powell emphasized the case for continuing to raise interest rate hikes is “strong.”

Powell pointed out that the last two Fed-induced bubbles were created by “financial imbalances” rather than inflation — the 2008 financial crisis and Dot Com bust in the early 2000s.

“While some asset prices are high by historical standards, I do not see broad signs of excessive borrowing or leverage. In addition, banks have far greater levels of capital and liquidity than before the crisis,” Powell said.

While Powell promises everyone that today is not a bubble, he does refer to “some asset prices are high by historical standards.” It is likely; he was indirectly referring to real estate, as storm clouds are starting to gather over the industry due to several years of rate hikes. Notice over the course of three decades, the Fed has managed to pop every real estate bubble.

Published:6/22/2018 12:54:57 PM
[Markets] Tom Arnold Teaming Up With Michael Cohen To "Take Down" Trump

D-list celebrity Tom Arnold says he's teaming up with President Trump's former longtime personal lawyer, Michael Cohen, to "take down" the president. 

"I say to Michael, 'Guess what? We’re taking Trump down together, and he’s so tired he’s like, 'OK,' and his wife is like, 'OK, f*** Trump,'" Arnold said, laughing. -NBC News

Arnold, the ex-husband of Roseanne Barr, tweeted a picture of himself and Cohen on Thursday with the caption "I love New York."

After languishing in near obscurity for over a decade doing bit-parts and cameos, Arnold was tapped by Vice in May for a new show called "The Hunt for the Trump Tapes," which will investigate the existence of long-rumored tapes claiming to show President Trump saying or doing compromising things. 

Arnold would not say whether Cohen was planning to give him any tapes he might have of conversations with Trump.

But he added, "This dude has all the tapes — this dude has everything." -NBC News

Arnold admitted that tweeting the photo with Cohen was "indiscreet" - but that Cohen has been betrayed by Trump after many years of loyalty. 

"Michael Cohen showed up and worked diligently above and beyond and sacrificed and Donald Trump is like I don’t even know who he is. You think Michael doesn’t notice that?" Arnold said.

On Friday, Arnold backpedaled "clarified" that "Michael Cohen didn’t say Me & him were teaming up to take down Donald Trump! Michael has enough Trump on his plate. I’m the crazy person who said Me & Michael Cohen were teaming up to take down Trump of course. I meant it." FYI this is what a "tap on the shoulder" looks like... 

Cohen, often described as Trump's "fixer," is currently under investigation by federal prosecutors in New York over various business dealings - including a $130,000 payment to porn star Stormy Daniels in exchange for her silence over an alleged affair she had with President Trump. Trump has denied the claims.

The probe was launched based on a referral from special counsel Robert Mueller, who is investigating Russian interference in the 2016 election and possible ties to the Trump campaign and who has secured indictment against other Trump allies.

Cohen, who has denied wrongdoing and has not been charged with a crime, has already talked to congressional investigators. In October, he was questioned about a scuttled plan to build a Trump Tower in Moscow and emails he received in 2015 from Felix Sater, a former Trump associate, about the real estate deal. -NBC News

Sater - who works for the FBI, sat down with Tom Arnold in early May where they "shared stories about NY real estate, our mutual friend, visiting our mutual friend on the set of the Apprentice, Russia & Video tapes." 

Cohen reportedly hired a new attorney earlier this week - a former prosecutor for the U.S. attorney's office in Manhattan - following a dispute over legal bills with his prior legal team. His law office and hotel room were raided in April, where boxes of documents, phones, electronic devices and computer equipment were seized. 

At a recent court hearing, prosecutors said they were still sorting through the material and needed more time to piece together the contents of a shredder and gain access to a BlackBerry.

Even before the raids, federal investigators had been monitoring Cohen's phone lines, multiple senior officials and individuals with knowledge of the legal proceedings have told NBC News.

The calls were logged by what is commonly referred to as a pen register, which records the number of the phone that made the call and the number that received it, but does not record the contents of any conversation.

Cohen has denied wrongdoing. -NBC News

Will a C-list celebrity (perhaps best known for his former wife, Roseanne) take down the president with the help of Michael Cohen? Tune in and find out on the next episode of whatever timeline this is.

Published:6/22/2018 12:25:22 PM
[Entertainment] Anthony Bourdain Had No Narcotics in His Body at Time of Death Anthony BourdainTwo weeks after Anthony Bourdain's tragic passing, new information is surfacing about the acclaimed chef upon his death. The Parts Unknown host only had a "trace of nonnarcotic...
Published:6/22/2018 12:25:22 PM
[Entertainment] Reaction to Roseanne Spinoff The Conners Is Mixed Among Fans Laurie Metcalf, RoseanneABC said goodbye to Roseanne and Roseanne Barr and hello to The Conners, a spinoff of the iconic sitcom about Roseanne Conner's family. Your favorites are back, Jackie (Laurie Metcalf), Dan...
Published:6/22/2018 11:54:37 AM
[Entertainment] All 11 Marvel TV shows, definitively ranked (including 'Luke Cage') From the highs of 'Jessica Jones' and 'Luke Cage' to the lows of 'Inhumans' and 'Iron Fist,' we rank 11 Marvel TV shows, in honor of 'Cloak and Dagger's debut on Freeform.
     
 
 
Published:6/22/2018 11:54:37 AM
[Markets] Fun With The Fed's "Stress" Test

Authored by Nicholas Colas via DataTrekResearch.com,

Like many of you, I spent part of the late afternoon reading through the results of the Federal Reserve’s annual stress test of the US banking system. At first blush, everything looks good. Everyone passed. Now investors can look forward to next week’s Comprehensive Capital Analysis and Review, when we hear what sorts of buybacks and dividends these institutions can pay in the year ahead.

It’s difficult not to gasp a little when you look at the “Severely adverse” scenario the Fed used in this year’s review:

  • A 7 quarter recession that leaves GDP 7.5% lower than prior highs

  • Unemployment rises to 10% over the same period

  • Inflation drops to 1% and short term Treasuries yield close to zero

  • At the same time, investors shun long term Treasuries and yields there remain unchanged

  • Investment grade and mortgage yield spreads blow out to 5.75% and 3.5% respectively

  • US stocks drop by 65% in early 2019, and the VIX goes over 60

  • House prices drop 30% and commercial real estate by 40%

I don’t know about you, but to me that looks like the recipe for revolution more than a regulatory what-if scenario, but let’s go with it.

Two points:

#1) If the US banking system is really as robust as the Fed’s analysis indicates, doesn’t that merit a higher multiple on domestic stocks than historical norms? A bullet proof banking system should be worth a systematic premium over a shaky one, after all. America’s banks should be able to provide capital in even a severe downturn, make orderly markets if they have capital markets desks, and generally act as they would at any other point in the economic cycle. That would be a welcome change.

Now, there is a headwind to this positive case: the Financial sector is 14% of the S&P 500, and the regulatory process that makes them systematically safe also reduces their structural return on capital. So we’re unlikely to see much P/E expansion in the group, but every other sector - consumer or industrial - should get an uptick. A robust financial system should make the next recession easier than most previous ones by limiting any shock to the supply of credit, after all. Trough earnings will be higher than expected, and valuations should expand.

This is ultimately a cyclical argument, which means we’ll have to see it work in the next downturn before investors are willing to pay higher multiples. But for those investors who actively consider 5-10 year equity investment horizons, this is a bullish case we’ve not read anywhere else.

#2) If the Fed’s stress tests have a fatal flaw, it is that they assume a “V” bottom from the near-death levels they outline in their requirements. This doesn’t get much attention in the Fed’s document (link at the end of this note) but as near as we can tell, this is what they assume in the “Severely adverse” scenario for a recovery:

  • Unemployment improves in the 6 quarters after the peak by almost 2 points

  • GDP growth turns positive 4 quarters after its trough

  • US equity markets recover almost all their losses in the 2 years after the bottom

  • Corporate bond spreads recover to near 2014 levels 7 quarters after they peak

  • The VIX breaks below its long run average (20) just 2-3 quarters after the Dow trades at 10,000

Some of those – GDP and unemployment – we can see; the Dow’s recovery, bond spreads tightening and the VIX seem fanciful at best. We understand the Fed’s intent is to model another 2007-2008 scenario, but perhaps the next downturn will be different. For example:

  • The next recession, even a garden-variety contraction, will come just as artificial intelligence, robotics, drones, and other technologies hit their strides. All those advances have been invisible in the unemployment data because the US economy is growing.

    Take it from an old cyclicals analyst: companies do their big restructurings in economic downturns, not expansions. The next period of contraction is when capital will substitute for labor at an accelerating rate.
  • At the start of 2007, US public debt-to-GDP was 63%; it is now 106% (yes, we include Social Security). There will potentially be less room for fiscal stimulus in the next downturn, especially since every other developed economy has the same problem (which may be why the Fed’s assumptions include no change to long term yields).

The upshot here is that the next recession – especially a severe one – may not be anywhere near as easy on the way out as the Fed’s scenarios portray. 

So yes, the system is safe at the bottom of a 2007-style crack. But what if the recovery is much slower?

Since the Fed assumes a “V”, what happens if it is an “L”. We don’t know; they don’t include that possibility.

And what does it mean that the most systemically important banks in the world are in a bear market?

Published:6/22/2018 11:54:37 AM
[Entertainment] The Proposal Pulls Second Episode After Contestant Accused of Facilitating Sexual Assault The ProposalJust an episode into ABC's newly debuted series, The Proposal, the show has been faced with an off-screen problem. ABC and Warner Horizon confirmed to E! News that they have decided...
Published:6/22/2018 11:24:29 AM
[Apps] Amazon FreeTime Unlimited finally lands on Apple’s App Store Five and half years after it launched, one of the more popular apps for kids’ reading and entertainment has finally arrived on the iOS. Amazon FreeTime Unlimited, the e-commerce giant’s subscription service for children 3-12 that gives unlimited access to 10,000 books, movies and TV shows for $2.99 per month for up to four users […] Published:6/22/2018 11:24:29 AM
[Entertainment] Timeless Canceled Again by NBC--But It Might Not Be the End TimelessHistory is repeating itself. After a few weeks of uncertainty, NBC has made the decision to cancel Timeless after two seasons...just one year after canceling and uncanceling the...
Published:6/22/2018 10:54:08 AM
[Politics] WTH?! Tom Arnold says he and Mike Cohen are going to TAKE DOWN Trump!? The Trump presidency continues to throw us insane curve balls, and this one comes courtesy of crazy nutball Tom Arnold. Check out what he tweeted last night: More from the Hill: Arnold . . . Published:6/22/2018 10:54:08 AM
[Politics] WTH?! Tom Arnold says he and Mike Cohen are going to TAKE DOWN Trump!? The Trump presidency continues to throw us insane curve balls, and this one comes courtesy of crazy nutball Tom Arnold. Check out what he tweeted last night: More from the Hill: Arnold . . . Published:6/22/2018 10:54:08 AM
[Left Column] Scientists: 30 Years On, How Well Do Global Warming Predictions Stand Up?

Climatologist Dr. Pat Michaels and Meteorologist Dr. Ryan Maue:

"Thirty years of data have been collected since Mr. Hansen outlined his scenarios—enough to determine which was closest to reality. And the winner is Scenario C. Global surface temperature has not increased significantly since 2000, discounting the larger-than-usual El Niño of 2015-16. Assessed by Mr. Hansen’s model, surface temperatures are behaving as if we had capped 18 years ago the carbon-dioxide emissions responsible for the enhanced greenhouse effect. But we didn’t. And it isn’t just Mr. Hansen who got it wrong. Models devised by the United Nations Intergovernmental Panel on Climate Change have, on average, predicted about twice as much warming as has been observed since global satellite temperature monitoring began 40 years ago..."

"Several more of Mr. Hansen’s predictions can now be judged by history. Have hurricanes gotten stronger, as Mr. Hansen predicted in a 2016 study? No. Satellite data from 1970 onward shows no evidence of this in relation to global surface temperature. Have storms caused increasing amounts of damage in the U.S.? Data from the National Oceanic and Atmospheric Administration show no such increase in damage, measured as a percentage of gross domestic product. How about stronger tornadoes? The opposite may be true, as NOAA data offers some evidence of a decline. The list of what didn’t happen is long and tedious."

Published:6/22/2018 10:54:08 AM
[Entertainment] XXXTentacion's Mom Hints His Girlfriend Is Pregnant XXXtentacionWas XXXTentacion set to become a dad? The rapper was shot dead outside a motorcycle dealership in south Florida on Monday. XXXTentacion, whose real name was Jahseh Onfroy, was...
Published:6/22/2018 10:24:03 AM
[Markets] NATO Chief Warns "Alliance May Not Survive"

With President Trump's performance at last year's NATO summit still fresh in the minds of its members, NATO's continued existence has probably never before seemed as tenuous as it does right now. Trump has blasted NATO as "obsolete" and criticized the alliance in keeping with his "America First" platform. But NATO Secretary General Jens Stoltenberg warned during a recent speech that there are still many strategic reasons why the alliance should persevere: Speaking in the UK, Stoltenberg invoked the rise of international terrorism and an "assertive Russia" as threats that should underscore how serious the issue of preserving the alliance truly is.

NATTO

Yet, there's still no guarantee that, despite these security concerns, the trans-Atlantic partnership will survive as the relationship between the US and other NATO powers deteriorates. To protect against NATO's collapse, Stoltenberg called for its members to make a bigger effort to shore up the military alliance, according to the Associated Press.

"It is not written in stone that the trans-Atlantic bond will survive forever," Stoltenberg said during a speech in London. "But I believe we will preserve it."

With the NATO summit looming in July, Stoltenberg said "we may have seen the weakening" of the relationships between North America and Europe, but "maintaining the trans-Atlantic partnership is in our strategic interests." The world, Stoltenberg said, is facing "the most unpredictable security environment in a generation", largely thanks to terrorism.

"We must continue to protect our multilateral institutions like NATO, and we must continue to stand up for the international rules-based order," he said.

[...]

"We have had differences before, and the lesson of history is that we overcome these differences every time," Stoltenberg said.

But as trade tensions strain Trump's relationship with Europe, concerns about President Recep Tayyip Erdogan's growing authoritarianism have raised speculation about the possibility of a Turkish exit. Meanwhile, Stoltenberg has hinted at the possibility of a dialogue with Russia, as he has said he doesn't want "another cold war." 

Which of course is incredibly ironic as his actions...

Definitely don't match that 'diplomatic' rhetoric.

Published:6/22/2018 10:24:03 AM
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Published:6/22/2018 9:24:37 AM
[Entertainment] Paul McCartney makes James Corden cry during emotional 'Carpool Karaoke' It turns out, all you need is love and Paul McCartney joining James Corden for an epic and emotional "Carpool Karaoke."
     
 
 
Published:6/22/2018 8:23:34 AM
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Published:6/22/2018 8:23:34 AM
[Markets] Is This Why Germany Repatriated 583 Tons Of Gold?

Authord by Tom Lewis via GoldTelegraph.com,

Before declaring bankruptcy, Lehman Bros. had $639 billion in assets. It was thought to be too big to fail. Currently, Deutsche Bank has almost triple those assets, $1.7 trillion, but its future is in question. The bank’s net income plummeted by 80 percent from its 2017 level. The Federal Reserve has labeled Deutsche Bank’s US operation as troubled. And that might be an understatement.

The growing problems at Deutsche Bank, combined with unprecedented global debts, could spell economic and financial chaos. Deutsche Bank is only one of the major banks in trouble. Others are nipping at its heels.

Mismanagement has plagued Deutsche Bank’s U.S. operations for years. The Federal Reserve criticized it in 2014 for inaccurate reporting and regulatory violations. In 2015, 2016, and 2017, the Federal Reserve demanded corrections, but Deutsche Bank did not comply.

When Deutsche Bank’s stocks crashed, S&P downgraded the bank from A- to BBB+, a rating not far from junk. One of the problems cited by S&P was unstable and shifting leadership and generally poor performance.

Deutsche Bank is far from acknowledging any problems. Its new CEO Sewing spoke to his staff after the rating downgrade and reassured them of the bank’s inherent strength and future strategies. Following this speech, Deutsche Bank was forced to report a drop in revenues of 5 percent, and a decrease in income of 79 percent. Could Sewing have been a tad optimistic?

Its losses for 2017 were reported at 497 million euros, compared to the 290 million euros predicted by Reuters analysts. If Deutsche Bank is to survive, significant changes will have to be implemented. And so far, it’s not even acknowledging it has a problem.

While Deutsche Bank appears to be following in the footsteps of Lehman Bros., a comparison to Fannie Mae or Freddie Mac may be more accurate. So far, the German government has denied any plans to bail out trouble Deutsche Bank, but this is likely change. Germany’s largest bank is more critical to its economy than Fannie Mae and Freddie Mac were to the US. In addition, the German government would acquire Deutsche Bank’s assets at a fraction of their value. It is doubtful that Chancellor Merkel will be able to resist such temptation. Besides, allowing Deutsche Bank to fail could have catastrophic consequences for Germany and a bad effect on the global economy.

With a possible financial crisis looming, Germany has shown a renewed interest in gold. Gold has historically been the most reliable hedge against inflation, and Germany’s central bank, the Bundesbank, has repatriated583 tonnes, or $31 million worth, of gold recently, years ahead of schedule.

Deutsche Bank is not the only European bank with overvalued assets. If Deutsche Bank continues its path to a destructive downfall, other banks will be affected. That is the reason gold is looking like an excellent investment against any future financial ripple effect.

Deutsche Bank is suffering from a lack of faith for a reason. Gold could put investors’ minds at ease.

Published:6/22/2018 8:23:34 AM
[Entertainment] The 5 best summer movies to binge-watch this weekend From "(500) Days of Summer" to "The Sisterhood of the Traveling Pants" to "Dirty Dancing," we rounded up our five favorite summertime movies to keep you cool.
     
 
 
Published:6/22/2018 7:54:21 AM
[Markets] Loonie Tumbles After Ugly Canadian Data: Worst Toronto Retail Sales In 3 Years

The synchronized economic slowdown has hit again, this time striking America's latest trade war opponent, Canada, which moments ago reported some very ugly inflation and retail sales data.

First, on the inflation front, Canadian CPI rose just 2.2% in May from 2.1% in April, badly missing what Wall Street estimated would be an increase to 2.6% due to higher gasoline prices. According to Statistics Canada, the largest upside contributor to the inflation print was the recreation, education category, 0.27 percentage points, while the largest downside contributor was the household operations category, -0.12 percentage points.

Broken down by the various CPI metrics, the data was as follows:

  • The average of CPI core measures was 1.90% y/y in May from 1.97% a month earlier
  • CPI-common at 1.9% y/y in May from 1.9% in previous month
  • CPI-median at 1.9% y/y in May from 1.9% in previous month
  • CPI-trim at 1.9% y/y in May from 2.1% in previous month

The retail sales data was even worse, with the headline number tumbling -1.2% in April, well below not only the consensus estimate of an unchanged print , but also below the lowest end of the forecast range which was -0.4% to 0.2%. Core retail sales, ex-autos, also missed, falling 0.1% in April, est. +0.5%

Just like in the US, a big contributor to the miss appears to be the rise in e-commerce, with online sales of C$1.33B in April, up 8.8% from a year earlier and representing 2.7% of total retail sales.

Broken down by region, there was weakness all round, however Toronto was an outlier, with retail sales falling most since Jan. 2015. Poor weather weather may have hurt retail sales.

  • Toronto retail sales -2.9% m/m
  • Montreal retail sales -2.60% m/m
  • Vancouver retail sales +0.2% m/m

Following the data, the Canadian loony tumbled by 100 pips, with the USCAD rising from 1.327 to 1.337, before regaining some losses.

Published:6/22/2018 7:54:21 AM
[Entertainment] Lily Collins Channels a Summer Garden and More Best Dressed Looks ESC: Best Dressed, Lily CollinsThis week, the summer solstice marked the first day of the season. Luckily, celebs were already showing us how to do it in style. Leading sophisticated society, Lily Collins took on the...
Published:6/22/2018 7:24:43 AM
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Published:6/22/2018 6:53:22 AM
[Markets] White House Split On China Trade War As Moderates Push To Restart Talks

Following reports yesterday that Chinese trade officials had "quietly" approached the US about finding a way to avert a worsening trade war by restarting negotiations, Bloomberg reported Friday that the effort isn't entirely one-sided: Some White House officials are also pushing to restart talks with China to try and avert a trade catastrophe when US tariffs take effect on July 6. National Economic Council staff believe now is the time to try and hammer out a diplomatic solution, before the gap between the proposed and implemented tariffs shown in the chart below, starts to narrow.

Tariffs

However, the chances of the US returning to the table with China are "slim", as senior administration officials - a group that presumably includes President Trump - feel that Beijing needs to pay for decades of "economic aggression." 

After July 6, the opportunity for "high level" talks could fade as the pace at which new tariffs are imposed would likely accelerate. Since the US imports far more goods from China than China imports from the US, the Chinese government could choose another strategy for retaliation after tariffs are exhausted - including a diplomatic retaliation like ordering Kim Jong Un to scuttle talks with the US.

But by far the most interesting detail from the Bloomberg story is that it's the National Economic Council - which is led by Larry Kudlow - that's pushing for a detente from within the Trump administration. Kudlow was an early critic of Trump's protectionist trade policies, before he joined the administration and publicly repeated the administration's line that China had been taking advantage of the US for years when it comes to trade. Bloomberg with more:

Some White House officials are trying to restart talks with China to avoid a trade war before U.S. tariffs on Chinese products take effect July 6, three people familiar with the plans said, setting up a battle with others in the administration who favor a harder line.

Staff of the National Economic Council have contacted former U.S. government officials and China experts in recent days to gauge chances for high-level talks in the next two weeks, the people said on condition of anonymity to discuss the inquiries. One idea NEC staff floated was inviting Chinese Vice President Wang Qishan before the tariff deadline, they said.

The outreach signals a willingness by some U.S. officials to seek a truce before $34 billion in Chinese products are hit with tariffs rather than trigger a trade war between the world’s two largest economies. Still, the chances of such negotiations happening in the near term are slim as long as opponents inside the administration favor penalizing Beijing. President Donald Trump has shown no signs of backing down.

Meanwhile, according to Bloomberg sources, different factions within the Trump administration have different ideas about what would constitute a "win" in the burgeoning trade conflict. The hardliners (Peter Navarro, Robert Lighthizer) are pushing for China to accept "structural changes" - like abolishing joint ventures that allow Chinese companies to effectively steal foreign intellectual property - while a more moderate group (Treasury Secretary Steven Mnuchin and Kudlow) would be satisfied with a deal aimed at lowering the US-China trade deficit.

China

Still, with barely two weeks remaining before the first round of Section 301 tariffs take effect on July 6, the US probably wouldn't be able to arrange a meeting with Chinese Vice President Wang Qishan beforehand. The administration also needs to release a product list for those tariffs. Of course, if US officials need anymore inspiration to return to the table, they could take a look at a Bank of America report from earlier this week that shows just how much US stocks would have to lose from globalization going "in reverse." 

BankofAmerica

Published:6/22/2018 6:53:21 AM
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Published:6/22/2018 6:24:01 AM
[Markets] Dow's 8 Day Losing Streak Set To End Amid Global Relief Rally

After yesterday's intraday risk reversal, which sent S&P futures from session highs just before the European open, to lows following a day of news with more trade war developments and renewed Italian concerns, while the Dow closed down for 8 sessions in a row, tied for the longest losing streak since 1978, markets appear willing to put it all behind as they close out the week, with futures rising to 12 points to 2,765 and just shy of session highs, while the Dow finally appears poised to end its losing streak.

The optimism was broad-based with European stocks rising and unwind much of yesterday’s Daimler-led risk-off moves, as European manufacturing and services PMI data beat analysts’ expectations, with the composite posting the first monthly rebound after 3 months of declines, lifting the EUR above 1.16, and sparking a short squeeze.

  • EU Markit Manufacturing Flash PMI 55.0 vs. Exp. 55.0 (Prev. 55.5)
  • EU Markit Services Flash PMI 55.0 vs. Exp. 53.7 (Prev. 53.8)
  • EU Markit Composite Flash PMI 54.8 vs. Exp. 53.9 (Prev. 54.1)

The EURUSD levitation however was interrupted by news that the German SPD party was preparing for new elections knocked the common currency back.

As a result, European equity markets rallied from the open, with the bank sector supported by Italian bank M&A news; Greek stock and bond markets outperform after EFSF repayment extension plan is confirmed.  Automaker and supplier stocks were the only segment to decline among the broader 19-industry Stoxx Europe 600 Index amid lingering concerns about China’s plan for retaliatory tariffs on U.S.-made vehicles and regulators’ crackdowns on diesel emissions. Core fixed income edges lower given general positive environment.

Risk sentiment benefited from reports that some U.S. officials were trying to restart trade talks with China before President Trump’s tariffs come into effect next month, which in turn sent the Bloomberg dollar index dropping for a third day, extending its weekly decline to 0.3%, the biggest since mid-April, as stretched positioning dictates price action with longs taking profit amid deescalation of trade war concerns.

In Asia, declines in Japanese and Hong Kong equities were offset by advances in their Chinese and Korean counterparts as investors awaited developments. The Nikkei 225 (-0.8%) saw early underperformance amid recent JPY strength, while Australia's ASX 200 (-0.2%) bucked the trend for most the session amid strength in financials led by ANZ Bank which announced to double its share repurchase. Elsewhere, trade concerns continued to cloud over the Hang Seng (+0.2%) and Shanghai Comp. (+0.5%) from the open, although stocks then recovered as participants also digested another net weekly liquidity injection from the PBoC.

In FX, the dollar and yen both fell against their major peers as reports that some U.S. officials were trying to resume trade talks with China damped demand for haven assets; euro hit one- week high. The Australian dollar led G-10 advance, as an oil rally helped to insulate spot against cross related selling; New Zealand’s dollar also rose versus most Group-of-10 peers. Elsewhere, the pound was up against most of the G-10 group on continued buying after the Bank of England’s Chief Economist Andy Haldane supported a rate hike.

The weakening dollar provided respite to Asian currencies under pressure from growing concern there will be a full-blown trade war.

In rates, treasuries edged lower, along with bunds as Thursday’s risk-off trade is unwound following Greece debt deal; Italian bonds bounced reversing some of yesterday's losses.

Oil jumped ahead of the conclusion of OPEC's summit, where the cartel is expected to announce a net 600,000 barrel increase in production (1MM nominal), although it remains unclear if Iran will endorse the decision. WTI traded higher as OPEC near an agreement on an output increase. Initially sources had suggested that ‘building [a] consensus [would] be a big challenge’ and ‘not all OPEC members [were] likely to accept the Ministerial Committee's proposal for an oil output increase of around 1mln BPD’. Whilse source reports had also suggested that Iran were doubting a consensus could be reached a more collaborative tone was struck after last minute talks and negotiations, with Iran stating that the meeting with the Saudi Oil Minister was positive. Following this multiple oil ministers confirmed that a compromise deal including a higher Iran quota may be part of the agreement and the 1mln BPD increase was an overestimation. The real effect is to be 700k BPD as according to the Nigerian Energy Minister.

Gold is up slightly heading in to the weeks end as the USD edges off of 11 month highs. Steel is set for the worst week in two months as the metal is eyeing losses once again on Friday. Copper is also set to fall on Friday as worries loom about falling Chinese demand due to trade concerns

Looking ahead, highlights include Canadian CPI and Retail Sales and the OPEC press conference. In the US, economic data include Markit manufacturing and Services PMI. CarMax and Blackberry are due to release results.

Market Snapshot

  • S&P 500 futures up 0.4% to 2,763.50
  • STOXX Europe 600 up 0.4% to 382.54
  • MXAP up 0.02% to 169.06
  • MXAPJ up 0.4% to 550.47
  • Nikkei down 0.8% to 22,516.83
  • Topix down 0.3% to 1,744.83
  • Hang Seng Index up 0.2% to 29,338.70
  • Shanghai Composite up 0.5% to 2,889.76
  • Sensex up 0.2% to 35,516.79
  • Australia S&P/ASX 200 down 0.1% to 6,225.23
  • Kospi up 0.8% to 2,357.22
  • Brent Futures up 1.4% to $74.05/bbl
  • Gold spot up 0.1% to $1,268.56/oz
  • U.S. Dollar Index down 0.3% to 94.61
  • German 10Y yield rose 1.5 bps to 0.35%
  • Euro up 0.4% to $1.1650
  • Brent Futures up 1.4% to $74.05/bbl
  • Italian 10Y yield rose 18.0 bps to 2.464%
  • Spanish 10Y yield fell 1.5 bps to 1.321%

Top Overnight News

  • International Monetary Fund Managing Director Christine Lagarde warned that financial markets could react violently to any fiscal loosening in large member states as the fund prepares for a mission to Italy.
  • Some White House officials are trying to restart talks with China to avoid a trade war before U.S. tariffs on Chinese products take effect July 6, three people familiar with the plans said, setting up a battle with others in the administration who favor a harder line
  • OPEC and its allies reached a preliminary agreement in the face of strong opposition from Iran to boost production by a theoretical 1 million barrels a day -- although the actual increase will be smaller as several countries are unable to raise output
  • Greece’s euro-area creditors struck a landmark deal to ease repayment terms on some of the nation’s mountain of debt, clearing the way for the country to exit the lifeline that’s kept it afloat since 2010
  • Economic momentum in the euro area unexpectedly picked up in June, although worrying signs persist for the common-currency region, IHS Markit said Friday
  • Turkish President Recep Tayyip Erdogan seeks re-election on Sunday. But he risks running into a demographic wall, as he may struggle to win the young vote -- one reason why the upcoming vote could be the tightest he’s faced
  • Greece’s euro-area creditors struck a landmark deal to ease repayment terms on some of the nation’s loans in an effort to ease its mountain of debt and clear the way for it to exit the lifeline that’s kept it afloat since 2010
  • U.K. Chancellor of the Exchequer Philip Hammond said he’s no enemy of Brexit as he slammed European Union proposals for cross-border financial services after Britain leaves the bloc
  • Nomura Holdings Inc. dismissed 28 sales and trading staff in the U.S., according to a person familiar with the matter

Asia stocks were somewhat mixed with the region cautious as trade concerns lingered and following a weak lead from Wall St where all major US indices closed negative and the DJIA declined for an 8th consecutive day to post its longest losing streak in over a year. As such, Nikkei 225 (-0.8%) saw early underperformance amid recent JPY strength, while ASX 200 (-0.2%) bucked the trend for most the session amid strength in financials led by ANZ Bank which announced to double its share repurchase. Elsewhere, trade concerns continued to cloud over the Hang Seng (+0.2%) and Shanghai Comp. (+0.5%) from the open, although stocks then recovered as participants also digested another net weekly liquidity injection from the PBoC. Finally, 10yr JGBs were relatively unchanged with prices sitting near 2-week highs, while the latest CPI data from Japan was largely ignored despite the headline being a tad firmer than expected as inflation remained far from the 2% price goal. In addition, today’s BoJ Rinban announcement also failed to spur demand as the central bank maintained all purchase amounts. PBoC injected CNY 40bln via 7-day reverse repos and CNY 30bln via 14-day reverse repos, for a net weekly injection of CNY 140bln vs. last week's CNY 240bln net injection.

Top Asian News

  • Sharp Is Raising as Much as 216 Billion Yen in Share Sale
  • Mahathir Says Ringgit’s Fair Value Is Same as Asia-Crisis Peg
  • What’s Wrong With Asian Stocks? Theories From Goldman and Others
  • Barclays Sees Rupee Suffering Worse Rout Than in Taper Tantrum
  • Hong Kong Dollar Strength Seen to Ease When Xiaomi Boost Fades

European bourses are largely higher (Eurostoxx 50 +0.8%) with bank stocks leading the gains on Friday, as fears over Italian Euroscepticism ease, as Borghi reiterates there is no intention to leave the Euro Zone. The energy sector was dragging on equities as OPEC accord tensions pressured the sector but bounced on a deal nearing closure. The SMI is currently the outperforming bourse whilst the DAX underperforms as trade concerns linger over German auto names and pressure on the index. French company specific news dominates newswires, with the French Government saying they have no intention of breaking up EDF (flat) into a nuclear and non-nuclear unit, as well as Airbus (+1.5%) on a positive note being circulated from JP Morgan.

Top European News

  • Euro Area Growth Unexpectedly Quickens as Slowdown Risks Persist
  • Greece’s Creditors Agree to Landmark Debt Deal as Payments Eased
  • Jooste Profited From Steinhoff Land Deal in 2007, Filings Show
  • Citadel Securities Has Swaps-Trading Bonanza in Italy Chaos
  • As U.S. Alliances Fray, Russia Courts New Customers for Missiles
  • Deutsche Bank Defendant Defies Prosecutors in Paschi Trial

In FX, the EUR has continued its firm rebound from post-Fed and especially ECB policy meeting lows, with upbeat preliminary PMIs for June providing additional momentum to extend recovery gains beyond 1.1600 vs the Usd and briefly challenging the 21 DMA around 1.1670. However, offers layered between there and 1.1700 are capping further upside for now, and reports that Germany’s SPD are preparing for an election also undermined the single currency. AUD/NZD: The major beneficiaries a pre-OPEC squeeze in oil prices and broad Greenback retracement in wake of yesterday’s disappointing US data (Philly Fed survey in particular), as the former regains 0.7400 and looks to close above a chart pivot circa 0.7413, while the latter is hovering around 0.6900. GBP: Building on post-BoE gains with Cable testing 1.3300 for a near 2 big figure bounce from worst levels in the run up to Thursday’s MPC policy revelations, but also meeting some technical resistance ahead of its 21 DMA (1.3310). CAD - Consolidating above 1.3300 against its US counterpart and eyeing crude ahead of OPEC like the antipodean dollars and other commodity currencies, but also looking towards Canadian CPI and retail sales data for independent impetus ahead of next week’s BoC outlook report. DXY - Finding some support around 94.500, but off fresh ytd peaks some 100 ticks higher on the aforementioned worse-thanforecast US releases and decent recoveries in rival trading partners.

In commodities, oil trades higher as OPEC near an agreement on an output increase. Initially sources had suggested that ‘building [a] consensus [would] be a big challenge’ and ‘not all OPEC members [were] likely to accept the Ministerial Committee's proposal for an oil output increase of around 1mln BPD’. Whilst source reports had also suggested that Iran were doubting a consensus could be reached a more collaborative tone was struck after last minute talks and negotiations, with Iran stating that the meeting with the Saudi Oil Minister was positive. Following this multiple oil ministers confirmed that a compromise deal including a higher Iran quota may be part of the agreement and the 1mln BPD increase was an overestimation. The real effect is to be 700k BPD as according to the Nigerian Energy Minister. Libyan oil ports had exacerbated the rise in oil, with a further storage tank catching fire due to domestic conflicts. However, Libya’s NOC has confirmed Ras Lanuf and Es Sider are under the control of Libya’s National Army, with fires now all extinguished. Gold is up slightly heading in to the weeks end as the USD edges off of 11 month highs. Steel is set for the worst week in two months as the metal is eyeing losses once again on Friday. Copper is also set to fall on Friday as worries loom about falling Chinese demand due to trade concerns.

Looking at the day ahead, the big data highlight is the release of the flash June PMIs around the world. In Europe and the US we'll receive the manufacturing, services and composite prints. Away from that the final Q1 GDP revisions will  be made in France. The Oil market will also be in focus with the OPEC meeting in Vienna (continuing into Saturday).

US Event Calendar

  • 9:45am: Markit US Manufacturing PMI, est. 56.1, prior 56.4
  • 9:45am: Markit US Services PMI, est. 56.5, prior 56.8
  • 9:45am: Markit US Composite PMI, prior 56.6

DB's Jim Reid concludes the overnight wrap

Happy Friday. I hope you didn’t notice the morning being slightly darker in the northern hemisphere today. These are those rare weeks where I go to bed in bright light and wake up in it too. Sadly this doesn’t last long. In a few weeks it’ll be totally dark getting up to write this!

So what has this slightly darker day got in store for us. Given the current nervousness on trade and growth at the moment there will be a lot of interest in today’s flash PMIs, especially in Europe. This morning in Asia we’ve already had the manufacturing PMI in Japan with the reading coming in at 53.1 compared to 52.8 in May. Later this morning we’ll get the data from Europe. The consensus for the composite Euro area reading is 53.9. As a reminder May printed at 54.1 which was the lowest since November 2016. The small drop is expected to be as a result of the manufacturing sector (55.0 versus 55.5 previously) while the services sector is expected to hold steady at 53.8. Germany’s composite is expected to stay at 53.4 and France’s also to hold at 54.2 (although both are expected to show further deterioration in the manufacturing sector). For the US this afternoon both the manufacturing and services readings are expected to fall a modest 0.3pts to 56.1 and 56.5 respectively.

We’ll also see the OPEC meeting today, so all eyes on how much supply they’ll add to the market. Ahead of this, overnight Bloomberg noted OPEC ministers have reached a preliminary agreement to boost production by a theoretical 1m barrels a day, although Saudi Arabia’s energy minister noted this number is “nominal, as the actual effect will be something less because not every country can respond”, so the real production increase may be c600k barrels a day. Notably with Iran’s oil minister walking out of the meeting and telling reporters that “it was not a good meeting”, we may have to wait until Saturday to see whether this proposal will be formally ratified. For now, WTI oil is up c1% this morning.

Elsewhere in Asia, markets are mixed but little changed with the Nikkei (-1.0%) and Hang Seng (-0.27%) both lower while the Kospi (+0.19%) and Shanghai Comp. (+0.35%) are up modestly as we type. Datawise, Japan’s May core CPI was steady mom and in line at 0.7% yoy. Meanwhile, China’s Commerce Ministry said it will impose anti-dumping tariffs on imported styrene from the US, South Korea and Taiwan – ranging from 3.8% to 55.7% and taking effect from 23  June.

China’s import of the chemical from the US is not huge ($4bn worth last year) and the potential for higher tariffs has been flagged back in February, but the announcement does come at a somewhat sensitive time which could add to the trade tensions. Elsewhere, all of the 35 largest US banks have passed the first part of the Fed’s annual stress test, suggesting they have enough capital to withstand an extreme recession. Reuters noted that next week’s tests are the ones to watch as they’ll likely be tougher and the results will be used to determine whether the Fed approves or denies banks’ capital plans.

Yesterday was a slightly odd day as markets started to step up their focus on the impact of the potential trade war on a day where there was actually some hope that there was still a chance of a near term de-escalation. Daimler’s profit warning from Wednesday night which we reported yesterday was the catalyst even if the link to trade in their warning was perhaps exaggerated. Meanwhile Italy had a bad day due to the appointment of two eurosceptic in key parliamentary posts with a sales tax on US internet companies adding to the risk off. In truth Daimler’s issues (shares -4.90%) also included diesel and emissions problems so the trade element may have been slightly exaggerated especially as tariffs haven’t come in yet for them.

At a macro level China was reported by MNI as engaging with the U.S. to deescalate the Trade War. The story quoted “a source with knowledge of the matter” saying that China trade officials have approached US officials in order to find ways to minimize punitive tariffs on China. It went on to say that China and US are making last minute efforts to avert the tariffs’ implementation (the $34bn from July 6th). Note that this is not to do with the additional $200bn Mr Trump highlighted on Monday. Meanwhile, Bloomberg also cited that some White House officials are trying to restart talks with China too. Having said that, Wilbur Ross’s comments suggested less diplomacy around the corner. He said that “If it really does get to be a big war, we have many more bullets than any of these other countries”.

On Italy, the Senate selected economist Alberto Bagnai as head of the finance committee. He has written two books calling for the monetary union to be dismantled. I read the review of one of the books on Amazon and it said “As serious as euroscepticism can get”. This was from a guy called Billy! The role of head of the budget committee in the lower house was given to Claudio Borghi who is an economic adviser for the League party and one that has been involved in the mini-bots discussion which as a reminder started the serious sell-off a month ago. Italian 2 and 10yr yields rose +26.9bp and +18.1bp respectively while the 10y Bunds / BTPs spread also rose 22bp to 239bp.

Elsewhere the US Supreme Court announced that it will allow states and local government to start collecting sales taxes from internet retailers that don't currently charge. Wayfair Inc. initially dropped -9.5% following the court decision but pared back losses to close -1.6% after the company said it doesn’t expect “any noticeable impact”. Other online retailers also pared back declines as investors considered whether the additional taxes would materially shift consumers’ buying behaviour, in part as the States were already collecting c75% of the potential taxes from online purchases as per the Government Accountability Office. In the end, eBay (-3.2%) and Amazon (-1.1%) both fell while bricks and mortar retailers were in demand yesterday (Walmart +0.7%; Best Buy Co. +1.8%).

With all this, it was a risk off day (S&P 500 -0.63%) with the Dow (-0.80%) down for the 8th day in a row. The last 8-day negative run was March 2017 but there’s only been 1 other outside of that (2011) since the GFC. The last 9-day slump was back in 1978 so we’ll see if today matches that! Back in Europe, the DAX was weighed down by car marker stocks (-1.44%) while Italy’s FTSEMIB led the decline following the political changes mentioned earlier (-2.02%). Meanwhile credit spreads widened with Main and Crossover up 2.8bp and 6.5bp respectively. Elsewhere, core government bonds were also boosted by the risk off tone (UST10y yields -4.2bp; Bunds -4.2bp) while other peripherals underperformed along with Italy (Spain +7.3bp; Portugal +4.6bp).

Gilts (-2bps) were caught in the crossfire between the risk off and a hawkish BoE meeting yesterday. The MPC’s decision to keep cash rates steady was widely expected, but it was slightly surprising that BoE’s Chief Economist Haldane dissented for the first time since 2014 and voted for a rate hike at yesterday’s meeting (vote of 6-3). The minutes indicated that the Bank regards recent data as consistent with its judgment that the very weak GDP growth reported in Q1 will prove temporary and that “all members agreed that the domestic labour market had remained strong, and there was widespread evidence that slack was largely used up. Pay and domestic cost growth had continued to firm broadly as expected”. Following the meeting, the Bloomberg implied odds of a rate hike in August jumped +20ppt to 56% while Sterling also reversed an earlier drop to end +0.52% higher against the dollar. It’s also worth highlighting that the MPC voted to change guidance on when they will consider reducing the stock of debt purchased in QE – from until the BoE rate reached 2% to 1.5%. Later in the day, it was also announced that the BoE will get an extra £1.2bn capital injection to allow the Bank to respond more immediately to any new financial crisis.

Ahead of Turkey’s election for this Sunday, DB’s Kubilay Ozturk noted that in its inaugural dual elections, Turkey will be voting to elect 600 members to the National Assembly and a new President. The latest polls point to the AKP +MHP alliance winning a majority in the Parliament and Erdogan retaining his Presidential mandate in the second round. That said, Kubilay highlights that momentum behind the opposition has picked up since mid-May, pointing to a non-negligible possibility of non-AKP majority in the Parliament confronted with an Erdogan Presidency. Another possibility is full opposition victory in both elections, which seems a low likelihood event, based on current poll data. History suggests markets favour political clarity following the ballot, as manifested in the knee-jerk reaction after the June 2015 (negative) and the November 2015 (positive) elections. Secondly, markets also look for clarity in macro policy outlook, depending on starting conditions. Dissipation of political uncertainty and advent of policy clarity are necessary but not sufficient. A sustainable rally requires accommodative global conditions, too. See his report for more details.

Before we take a look at today’s calendar, we wrap up with other data releases from yesterday. In the US, the macro data was broadly softer than expectations. The June Philly Fed business index fell 14.5pts mom to 19.9 (vs. 29  expected) - the lowest level since November 2016. In the details, the new orders index dropped from the May reading which was at a 45 year high (-22.7pts mom to 17.9), while both the prices paid and prices received indices moderated a little but remained at elevated levels. Meanwhile, firms reported order backlogs were diminishing and were less upbeat about business prospects in the next six months. The May CB leading index was also below market (0.2% mom vs. 0.4% expected) while the April FHFA house price index was up 0.1% mom (vs. 0.5% expected), leading to annual growth of 6.4% yoy. Elsewhere, the weekly initial jobless claims (218k vs. 220k expected) and continuing claims (1,723k vs. 1,710k expected) were broadly in line and remain at low levels, suggesting further tightening of labour market conditions.

The Euro area’s June consumer confidence index was below consensus at -0.5 (vs. 0) but still resilient considering the 10y average reading was -13. France’s June manufacturing confidence index was steady mom and above market at 110 (vs. 108 expected) while the business confidence reading was in line at 106. Over in the UK, the May public sector net borrowing (ex-banking groups) was lower than expected at £5bn (vs. £6.3bn).

Looking at the day ahead, the big data highlight is the release of the flash June PMIs around the world. In Europe and the US we'll receive the manufacturing, services and composite prints. Away from that the final Q1 GDP revisions will  be made in France. The Oil market will also be in focus with the OPEC meeting in Vienna (continuing into Saturday).

Published:6/22/2018 6:24:00 AM
[Entertainment] The Exact Plan Khloe Kardashian Is Using To Get Back in Fighting Shape Post-Baby Khloe Kardashian Bible--Khloe Kardashian doesn't do starvation diets. While the Keeping Up With the Kardashians standout has been open about her desire to get snatched and, in her words, "f--k up...
Published:6/22/2018 5:53:03 AM
[Entertainment] Jurassic World: Fallen Kingdom Review Roundup: Did the Chris Pratt Sequel Rock the Critics' World? Jurassic World: Fallen KingdomWith Jurassic World: Fallen Kingdom officially out in theaters, one of the final questions remains: Did the critics dig this dino sequel? Three years after its 2015 predecessor, Jurassic...
Published:6/22/2018 5:23:13 AM
[Markets] German SPD Said Preparing For New Elections, Euro Slides

With just over a week left on Angela Merkel's CSU ultimatum to  resolve the German "refugee" problem in a manner that is satisfactory to her coalition partner Horst Seehofer (and who famously said recently that  he "can’t work with that woman anymore") and that sees an EU agreement that sends new migrants back to their originating European nations, something which in light of recent Italian populist developments is impossible and effectively guarantees that Merkel will be unsuccessful, on Friday morning Spiegel reported that the next step  for Chancellor Merkel now seems inevitable, and that Germany's SPD party is preparing for new elections.

Horst Seehofer and Angela Merkel. Photo: DPA

Specifically, Der Spiegel reported that Party Secretary General Lars Klingbeil held three internal meetings to prepare for possible new elections, which all happened late last week and early this week.

Topics covered included possible dates for new elections, which SPD strategists see in early September at the earliest.

According to the report, Klingbeil also ordered seeking out venues for special party summit, and that the SPD, which has seen a plunge in the polls in recent months, will contract a new PR agency regardless of whether new elections take place.

As expected, news that Germany may have new elections soon send the Euro - which until this moment had seen a sharp short squeeze - sliding. There has been no comment so far from either Merkel or the CDU/CSU.

 

Published:6/22/2018 5:23:13 AM
[Markets] The Dismal Science And The Beautiful Game

Authored by Jack Gao via INETeconomics.org,

Like economics, football is hotly contested, defiant of even the best predictions, and in desperate need of institutional reform...

Four years, 872 qualifying games, and seven Federal Reserve interest rate hikes later, the World Cup is back.

The world’s most popular sports tournament, happening in Russia for the next few weeks, brings together 32 national teams and will potentially attract the attention of more than half of the world’s population. Predictions for who will emerge victorious after 64 games are awfully hard, due to the role of sheer chance and the intrinsic limitation of any quantitative models.

Nonetheless, it’s an interesting intellectual exercise to look at the broad economic context of the countries that have qualified to play in this year’s tournament amongst all 210 countries who have tried - a World Cup record. In this spirit, I humbly offer this economic analysis of the 2018 FIFA World Cup.

Not Your Rich-Country Club

Much of the discussion in international economics is centered on income levels – but this is only partly the case in this year’s World Cup.

While a number of richest countries are in the list, including Switzerland, Iceland, Denmark, and Sweden, they’re neither anybody’s favorites to win the title nor fair representatives of the average team in the game.

For example, Spain and Germany’s chances of winning the cup trails behind that of Brazil, whose GDP per capita is substantially lower.

The overlap of OECD countries and World Cup teams is also limited. Of the 35 countries in the so-called “rich-man’s club,” only 15 are in the game this year, making up 47 percent of total participants.

The average income level of countries participating is about $26,000 per person, somewhere in between the world average ($10,000 per person) and the average for advanced countries ($45,000 per person). Some of the poorest nations in the world—such as Senegal, Morocco, and Tunisia—are also in Russia to showcase their creativity and solidarity, adding to the game’s popularity worldwide.

The Dubious Case for Democracy

The Economist magazine published an article earlier this month, claiming that the World Cup “rewards good government.” Unlike track-and-field or gymnastics, soccer requires “more creativity and flair” and “dictatorships are rubbish” at it, the article says.

This is a stretch at best. The simple logic that rich countries in the world today tend to be democracies and that they are likely to afford investment that produce good soccer teams is enough to confound the relationship between democracy and soccer performance per se. Furthermore, the relationship between democracy and economic performance, potentially a shorter chain of causation, is itself still subject to plentiful academic debate. If China indeed manages to elevate itself in soccer significantly via state-led initiative and fails to democratize, say, by 2050, the relationship between democracy and soccer will only be made weaker.

In this year’s tournament, four teams are from countries rated “not free” by the human rights watchdog Freedom House, and another four are rated “partially free.” Although this underrepresents the more than half of the world’s countries deemed not sufficiently “free,” these squads have made it into the tournament, despite the huge income effect playing to their disadvantage. The World Cup is not yet, like it or not, a pageant of democracy.

A Sport like No Other

Part of the reason the World Cup is so popular (though not in the US.., yet) is that it’s really a game sui generis.

The natural comparison to the athletic tournament of a similar size and influence is the (Summer) Olympic Games. Requiring standing professional teams and substantial investment in athletic facilities, the Olympics have come to be much more closely correlated with national power, broadly defined. Income level and country size are dominant factors in predicting the medal ranking, and the game closely resembles a winner-takes-most situation. Without much number crunching, one can comfortably foresee the United States, China, Russia and a few others coming to the top of the medal table in a given year. Historically, a small number of countries have collected the vast majority of Olympic medals and, in totality, the game has become devoid of surprise and representation.

The World Cup is different in this regard. Except for Russia (automatically qualified as host) and some European nations who have won more than or close to 1,000 Olympic medals, the average World Cup team is a perfect underdog in the Olympic Games. For a people who have only seen their athletes appearing on the podium once in the entire Olympic history, the Senegalese will certainly be overjoyed to see their national squad playing against Colombia, Japan, and Poland in the group stage, if not advancing to face England in the knockout.

In the World Cup, if perhaps in no major economic organization, the world’s countries face each other, quite literally, on an equal playing field.

Published:6/22/2018 4:23:15 AM
[Markets] Pakistan Panic: 3rd Currency Devaluation In 2018 Sends Sovereign Risk Soaring Above Argentina, Ukraine

While many of the world's eyes are on the carnage in Argentina as EM collapses, Pakistan has quietly devalued the Rupee three times this year, amid tumbling reserves which has sparked enough investor anxiety to send CDS spiking.

Pakistan is now 'riskier' than Greece, Ukraine, and Argentina...

The country has been roiled by domestic political and economic turmoil and was not helped this week when Moody’s changed the outlook on Pakistan to negative from stable citing heightened external vulnerability risk.

Moody’s affirmed its B3 rating

Says foreign exchange reserves have fallen to low levels and will not be replenished over the next 12-18 months, absent significant capital inflows.

Moody’s says low reserve adequacy threatens continued access to external financing at moderate costs, in turn potentially raising government liquidity risks.

It certainly looks like they are losing control of the currency...

 

And to pile on - Pakistan's main stock index - down 33% YTD in USD terms - just suffered a 'death cross'...

Notably all of this carnage has accelerated since the start of January which coincided with Pakistan's decision to ditch the dollar (following Trump's remarks) and get closer to China.

"SBP has already put in place the required regulatory framework which facilitates use of CNY in trade and investment transactions," the State Bank of Pakistan (SBP) said in a press release late Tuesday, ensuring that imports, exports and financing transactions can be denominated in the Chinese currency.

"The SBP, in the capacity of the policy maker of financial and currency markets, has taken comprehensive policy related measures to ensure that imports, exports and financing transactions can be denominated in yuan," Dawn news, Pakistan's most widely read English-language daily, announced while quoting the SBP press release.

sdf
Image source: WION News

As we reported in December, Pakistan has been contemplating the move since last month's formal launch of the Long Term Plan for the China-Pakistan Economic Corridor (CPEC), signed by the two sides on November 21. The CPEC is a flagship project of China's Belt and Road initiative - the 3,000 km, over $50 billion corridor which stretches from Kashgar in western China to Gwadar port in Pakistan on the Arabian sea.

Will China step up?

Published:6/22/2018 3:22:43 AM
[Markets] Soros Steams That Trump's "Revolution In World Affairs" Is Succeeding

Authored by Andrew Korybko via Oriental Review,

Soros is lamenting that his desired world order is under threat because of Trump.

Expressing frustration that “everything that could go wrong has gone wrong”, the billionaire financier of countless Color Revolutions all across the world told the Washington Post that he was “living in [his] own bubble” because he failed to foresee Trump’s meteoric rise. Fearful that Trump “is willing to destroy the world”, as he put it, he vowed to “redouble [his] efforts” in pouring millions of dollars into opposing everything that the President stands for all across the world.

While the Hungarian-American might come off as full of doom and gloom in his interview, he actually has a reason to feel that way because Trump has single-handedly presided over the dismantlement of the Liberal-Globalist world order that Soros has worked for decades to build, destroying the old paradigm of Trans-Atlantic relations in a simple spree of tweets and presiding over the return of Christian morals, ethics, and values in American society, ideas that are absolutely anathema to the atheist billionaire.

From Soros’ perspective, Trump is indeed destroying the world, albeit not in the apocalyptic sense like he’s implying but in the ideological one of pioneering a completely new world order than the one that the President inherited.

Former U.S. President Barack Obama congratulates U.S. President Donald Trump after he took the oath of office on the West Front of the U.S. Capitol on January 20, 2017 in Washington, DC

Obama, who can be regarded as Soros’ surrogate in the White House, worked towards building a world where the US bows before the authority of the UN on many (but crucially, not all) key issues such as climate change and sustainable development agendas, heralding in a new multilateralism that would have moved International Relations closer to a so-called “one world government”, albeit one that would still be largely under indirect American influence.

Concurrent with this, the Obama-Soros vision was to have the media attack all of their opponents as “racist, fascist, white supremacists” for daring to think that the future might be different, but then all of a sudden Trump came along and committed to undoing their legacy.

The world that Trump wants to build is one of unrestricted American unilateralism in “Leading from the Front” while unabashedly pioneering a return to unipolarity, righting what he truly believes to have been the many historic wrongs that Obama, Soros, and all the others before him committed in voluntarily handicapping American power through lopsided trade deals and various other unfair commitments.

All told, this global recalibration can rightly be described as a “Revolution in World Affairs” because of the “new thinking” involved in guiding America’s policies from here on out.

Published:6/22/2018 2:52:13 AM
[Markets] The United States Is Pushing Toward War With China

Authored by Michael Klare via The Nation,

The decision to change the name of US forces in the Pacific is more than symbolic... it’s a threat.

On May 30, Secretary of Defense James Mattis announced a momentous shift in American global strategic policy.

From now on, he decreed, the US Pacific Command (PACOM), which oversees all US military forces in Asia, will be called the Indo-Pacific Command (INDOPACOM).

The name change, Mattis explained, reflects “the increasing connectivity between the Indian and Pacific Oceans,” as well as Washington’s determination to remain the dominant power in both.

What? You didn’t hear about this anywhere? And even now, you’re not exactly blown away, right? Well, such a name change may not sound like much, but someday you may look back and realize that it couldn’t have been more consequential or ominous. Think of it as a signal that the US military is already setting the stage for an eventual confrontation with China.

If, until now, you hadn’t read about Mattis’s decision anywhere, I’m not surprised since the media gave it virtually no attention—less certainly than would have been accorded the least significant tweet Donald Trump ever dispatched. What coverage it did receive treated the name change as no more than a passing “symbolic” gesture, a Pentagon ploy to encourage India to join Japan, Australia, and other US allies in America’s Pacific alliance system. “In Symbolic Nod to India, US Pacific Command Changes Name” was the headline of a Reuters story on the subject and, to the extent that any attention was paid, it was typical.

That the media’s military analysts failed to notice anything more than symbolism in the deep-sixing of PACOM shouldn’t be surprising, given all the attention being paid to other major international developments—the pyrotechnics of the Korean summit in Singapore, the insults traded at and after the G7 meeting in Canada, or the ominous gathering storm over Iran. Add to this the poor grasp so many journalists have of the nature of the US military’s strategic thinking. Still, Mattis himself has not been shy about the geopolitical significance of linking the Indian and Pacific Oceans in such planning. In fact, it represents a fundamental shift in US military thinking with potentially far-reaching consequences.

Consider the backdrop to the name change: in recent months, the United States has stepped up its naval patrols in waters adjacent to Chinese-occupied islands in the South China Sea (as has China), raising the prospect of future clashes between the warships of the two countries. Such moves have been accompanied by ever more threatening language from the Department of Defense (DoD), indicating an intent to do nothing less than engage China militarily if that country’s build-up in the region continues. “When it comes down to introducing what they have done in the South China Sea, there are consequences,” Mattis declared at the Shangri La Strategic Dialogue in Singapore on June 2.

As a preliminary indication of what he meant by this, Mattis promptly disinvited the Chinese from the world’s largest multinational naval exercise, the Rim of the Pacific (RIMPAC), conducted annually under American auspices. “But that’s a relatively small consequence,” he added ominously, “and I believe there are much larger consequences in the future.” With that in mind, he soon announced that the Pentagon is planning to conduct “a steady drumbeat” of naval operations in waters abutting those Chinese-occupied islands, which should raise the heat between the two countries and could create the conditions for a miscalculation, a mistake, or even an accident at sea that might lead to far worse.

In addition to its plans to heighten naval tensions in seas adjacent to China, the Pentagon has been laboring to strengthen its military ties with US-friendly states on China’s perimeter, all clearly part of a long-term drive to—in Cold War fashion—“contain” Chinese power in Asia. On June 8, for example, the DoD launched Malabar 2018, a joint Pacific Ocean naval exercise involving forces from India, Japan, and the United States. Incorporating once neutral India into America’s anti-Chinese “Pacific” alliance system in this and other ways has, in fact, become a major 21st-century goal of the Pentagon, posing a significant new threat to China.

For decades, the principal objective of US strategy in Asia had been to bolster key Pacific allies Japan, South Korea, Taiwan, and the Philippines, while containing Chinese power in adjacent waters, including the East and South China Seas. However, in recent times, China has sought to spread its influence into Southeast Asia and the Indian Ocean region, in part by extolling its staggeringly ambitious “One Belt, One Road” trade and infrastructure initiative for the Eurasian continent and Africa. That vast project is clearly meant both as a unique vehicle for cooperation and a way to tie much of Eurasia into a future China-centered economic and energy system. Threatened by visions of such a future, American strategists have moved ever more decisively to constrain Chinese outreach in those very areas. That, then, is the context for the sudden concerted drive by US military strategists to link the Indian and Pacific Oceans and so encircle China with pro-American, anti-Chinese alliance systems. The name change on May 30 is a formal acknowledgement of an encirclement strategy that couldn’t, in the long run, be more dangerous.

GIRDING FOR WAR WITH CHINA

To grasp the ramifications of such moves, some background on the former PACOM might be useful. Originally known as the Far East Command, PACOM was established in 1947 and has been headquartered at US bases near Honolulu, Hawaii, ever since. As now constituted, its “area of responsibility” encompasses a mind-boggling expanse: all of East, South, and Southeast Asia, as well as Australia, New Zealand, and the waters of the Indian and Pacific Oceans—in other words, an area covering about 50% of the Earth’s surface and incorporating more than half of the global population. Though the Pentagon divides the whole planet like a giant pie into a set of “unified commands,” none of them is larger than the newly expansive, newly named Indo-Pacific Command, with its 375,000 military and civilian personnel.

Before the Indian Ocean was explicitly incorporated into its fold, PACOM mainly focused on maintaining control of the western Pacific, especially in waters around a number of friendly island and peninsula states like Japan, South Korea, and the Philippines. Its force structure has largely been composed of air and naval squadrons, along with a large Marine Corps presence on the Japanese island of Okinawa. Its most powerful combat unit is the US Pacific Fleet —like the area it now covers, the largest in the world. It’s made up of the 3rd and 7th Fleets, which together have approximately 200 ships and submarines, nearly 1,200 aircraft, and more than 130,000 sailors, pilots, Marines, and civilians.

On a day-to-day basis, until recently, the biggest worry confronting the command was the possibility of a conflict with nuclear-armed North Korea. During the late fall of 2017 and the winter of 2018, PACOM engaged in a continuing series of exercises designed to test its forces’ ability to overcome North Korean defenses and destroy its major military assets, including nuclear and missile facilities. These were undoubtedly intended, above all, as a warning to North Korean leader Kim Jong-un about what he could expect if he continued down the path of endless provocative missile and nuclear tests. It seems that, at least for the time being, President Trump has suspended such drills as a result of his summit meeting with Kim.

North Korea aside, the principal preoccupation of PACOM commanders has long been the rising power of China and how to contain it. This was evident at the May 30 ceremony in Hawaii at which Mattis announced that expansive name change and presided over a change-of-command ceremony, in which outgoing commander, Adm. Harry Harris Jr., was replaced by Adm. Phil Davidson. (Given the naval-centric nature of its mission, the command is almost invariably headed by an admiral.)

While avoiding any direct mention of China in his opening remarks, Mattis left not a smidgeon of uncertainty that the command’s new name was a challenge and a call for the future mobilization of regional opposition across a vast stretch of the planet to China’s dreams and desires. Other nations welcome US support, he insisted, as they prefer an environment of “free, fair, and reciprocal trade not bound by any nation’s predatory economics or threat of coercion, for the Indo-Pacific has many belts and many roads.” No one could mistake the meaning of that.

Departing Admiral Harris was blunter still. Although “North Korea remains our most immediate threat,” he declared, “China remains our biggest long-term challenge.” He then offered a warning: Without the stepped-up efforts of the US and its allies to constrain Beijing, “China will realize its dream of hegemony in Asia.” Yes, he admitted, it was still possible to cooperate with the Chinese on limited issues, but we should “stand ready to confront them when we must.” (On May 18, Admiral Harris was nominated by President Trump as the future US ambassador to South Korea, which will place a former military man at the US Embassy in Seoul.)

Harris’s successor, Admiral Davidson, seems, if anything, even more determined to put confronting China atop the command’s agenda. During his confirmation hearing before the Senate Armed Services Committee on April 17, he repeatedly highlighted the threat posed by Chinese military activities in the South China Sea and promised to resist them vigorously.

“Once [the South China Sea islands are] occupied, China will be able to extend its influence thousands of miles to the south and project power deep into Oceania,” he warned.

“The PLA [People’s Liberation Army] will be able to use these bases to challenge US presence in the region, and any forces deployed to the islands would easily overwhelm the military forces of any other South China Sea claimants. In short, China is now capable of controlling the South China Sea in all scenarios short of war with the United States.”

Is that, then, what Admiral Davidson sees in our future? War with China in those waters? His testimony made it crystal clear that his primary objective as head of the Indo-Pacific Command will be nothing less than training and equipping the forces under him for just such a future war, while enlisting the militaries of as many allies as possible in the Pentagon’s campaign to encircle that country.

“To prevent a situation where China is more likely to win a conflict,” he affirmed in his version of Pentagonese, “we must resource high-end capabilities in a timely fashion, preserve our network of allies and partners, and continue to recruit and train the best soldiers, sailors, airmen, Marines, and coastguardsmen in the world.”

Davidson’s first priority is to procure advanced weaponry and integrate it into the command’s force structure, ensuring that American combatants will always enjoy a technological advantage over their Chinese counterparts in any future confrontation. Almost as important, he, like his predecessors, seeks to bolster America’s military ties with other members of the contain-China club. This is where India comes in. Like the United States, its leadership is deeply concerned with China’s expanding presence in the Indian Ocean region, including the opening of a future port/naval base in Gwadar, Pakistan, and another potential one on the island of Sri Lanka, both in the Indian Ocean. Not surprisingly, given the periodic clashes between Chinese and Indian forces along their joint Himalayan borderlands and the permanent deployment of Chinese warships in the Indian Ocean, India’s prime minister Narendra Modi has shown himself to be increasingly disposed to join Washington in military arrangements aimed at limiting China’s geopolitical reach.

“An enduring strategic partnership with India comports with US goals and objectives in the Indo-Pacific,” Admiral Davidson said in his recent congressional testimony. Once installed as commander, he continued, “I will maintain the positive momentum and trajectory of our burgeoning strategic partnership.” His particular goal: to “increase maritime security cooperation.”

And so we arrive at the Indo-Pacific Command and a future shadowed by the potential for great power war.

THE VIEW FROM BEIJING

The way the name change at PACOM was covered in the United States, you would think it reflected, at most, a benign wish for greater economic connections between the Indian and Pacific Ocean regions, as well, perhaps, as a nod to America’s growing relationship with India. Nowhere was there any hint that what might lie behind it was a hostile and potentially threatening new approach to China—or that it could conceivably be perceived that way in Beijing. But there can be no doubt that the Chinese view such moves, including recent provocative naval operations in the disputed Paracel Islands of the South China Sea, as significant perils.

When, in late May, the Pentagon dispatched two warships—the USS Higgins, a destroyer, and the USS Antietam, a cruiser—into the waters near one of those newly fortified islands, the Chinese responded by sending in some of their own warships while issuing a statement condemning the provocative American naval patrols. The US action, said a Chinese military spokesperson, “seriously violated China’s sovereignty [and] undermined strategic mutual trust.” Described by the Pentagon as “freedom of navigation operations” (FRONOPs), such patrols are set to be increased at the behest of Mattis.

Of course, the Chinese are hardly blameless in the escalating tensions in the region. They have continued to militarize South China Sea islands whose ownership is in dispute, despite a promise that Chinese President Xi Jinping made to President Obama in 2015 not to do so. Some of those islands in the Spratly and Paracel archipelagos are also claimed by Vietnam, the Philippines, and other countries in the area and have been the subject of intensifying, often bitter disagreements among them about where rightful ownership really lies. Beijing has simply claimed sovereignty over all of them and refuses to compromise on the issue. By fortifying them—which American military commanders see as a latent military threat to US forces in the region—Beijing has provoked a particularly fierce US reaction, though these are obviously waters relatively close to China, but many thousands of miles from the continental United States.

From Beijing, the strategic outlook articulated by Secretary Mattis, as well as Admirals Harris and Davidson, is clearly viewed—and not without reason—as threatening and as evidence of Washington’s master plan to surround China, confine it, and prevent it from ever achieving the regional dominance its leaders believe is its due as the rising great power on the planet. To the Chinese leadership, changing PACOM’s name to the Indo-Pacific Command will just be another signal of Washington’s determination to extend its unprecedented military presence westward from the Pacific around Southeast Asia into the Indian Ocean and so further restrain the attainment of what it sees as China’s legitimate destiny.

However Chinese leaders end up responding to such strategic moves, one thing is certain: They will not view them with indifference. On the contrary, as challenged great powers have always done, they will undoubtedly seek ways to counter America’s containment strategy by whatever means are at hand. These may not initially be overtly military or even obvious, but in the long run they will certainly be vigorous and persistent. They will include efforts to compete with Washington in pursuit of Asian allies—as seen in Beijing’s fervent courtship of President Rodrigo Duterte of the Philippines—and to secure new basing arrangements abroad, possibly under the pretext, as in Pakistan and Sri Lanka, of establishing commercial shipping terminals. All of this will only add new tensions to an already anxiety-inducing relationship with the United States. As ever more warships from both countries patrol the region, the likelihood that accidents will occur, mistakes will be made, and future military clashes will result can only increase.

With the possibility of war with North Korea fading in the wake of the recent Singapore summit, one thing is guaranteed: The new US Indo-Pacific Command will only devote itself ever more fervently to what is already its one overriding priority: preparing for a conflict with China. Its commanders insist that they do not seek such a war, and believe that their preparations—by demonstrating America’s strength and resolve—will deter the Chinese from ever challenging American supremacy. That, however, is a fantasy. In reality, a strategy that calls for a “steady drumbeat” of naval operations aimed at intimidating China in waters near that country will create ever more possibilities, however unintended, of sparking the very conflagration that it is, at least theoretically, designed to prevent.

Right now, a Sino-American war sounds like the plotline of some half-baked dystopian novel. Unfortunately, given the direction in which both countries (and their militaries) are heading, it could, in the relatively near future, become a grim reality.

Published:6/22/2018 1:23:20 AM
[World] John Legend on Trump's border policy, baby Miles and his new summer rosé The R&B crooner debuted his new LVE Rosé on Thursday night in Beverly Hills. John Legend talked to USA TODAY about Donald Trump's border policies and how life is different with baby boy Miles at home.
     
 
 
Published:6/22/2018 1:23:20 AM
[Markets] Water Wars: India Facing "Worst Crisis In Its History"

India is facing its worst-ever water crisis, with some 600 million people facing acute water shortage, a government think-tank says.

The Niti Aayog report, which draws on data from 24 of India's 29 states, says the crisis is "only going to get worse" in the years ahead.

Around 200,000 Indians die every year because they have no access to clean water, according to the report. And as The BBC reports, many end up relying on private water suppliers or tankers paid for the by the government. Winding queues of people waiting to collect water from tankers or public taps is a common sight in Indian slums.

Indian cities and towns regularly run out water in the summer because they lack the infrastructure to deliver piped water to every home.

  • 600 million people face high-to-extreme water stress.

  • 75% of households do not have drinking water on premise. 84% rural households do not have piped water access.

  • 70% of our water is contaminated; India is currently ranked 120 among 122 countries in the water quality index.

India faces more than one problem - all compounding the nation's crisis:

Droughts are becoming more frequent, creating severe problems for India’s rain-dependent farmers (~53% of agriculture in India is rainfed17).

When water is available, it is likely to be contaminated (up to 70% of our water supply), resulting in nearly 200,000 deaths each year.

Interstate disagreements are on the rise, with seven major disputes currently raging, pointing to the fact that limited frameworks and institutions are in place for national water governance.

And that means massive problems lie ahead...

40% of the Indian population will have no access to drinking water by 2030 with 21 cities running out of groundwater by 2020 - affecting 100 million people which will cut 6% from GDP by 2050.

What remains alarming is that the states that are ranked the lowest - such as Uttar Pradesh and Haryana in the north or Bihar and Jharkhand in the east - are also home to nearly half of India's population as well the bulk of its agricultural produce.

But, the report said, policymakers face a difficult situation because there is not enough data available on how households and industries use and manage water.

While trade wars are grabbing all the headlines, the water wars are where the real pain lies.

Published:6/22/2018 12:22:37 AM
[Markets] Paul Craig Roberts: "The Entire Western World Lives In Cognitive Dissonance"

Authored by Paul Craig Roberts,

In this column I am going to use three of the current top news stories to illustrate the disconnect that is everywhere in the Western mind.

Let us begin with the family separation issue. The separation of children from immigrant/refugee/asylum parents has caused such public outcry that President Trump has backed off his policy and signed an executive order terminating family separation.

The horror of children locked up in warehouses operated by private businesses making a profit off of US taxpayers, while parents are prosecuted for illegal entry, woke even self-satisfied “exceptional and indispensable” Americans out of their stupor. It is a mystery that the Trump regime chose to discredit its border enforcement policy by separating families. Perhaps the policy was intended to deter illegal immigration by sending the message that if you come to America your children will be taken from you.

The question is: How is it that Americans can see and reject the inhumane border control policy and not see the inhumanity of family destruction that has been the over-riding result of Washington’s destruction in whole or part of seven or eight countries in the 21st century?

Millions of people have been separated from families by death inflicted by Washington, and for almost two decades protests have been almost nonexistent. No public outcry stopped George W. Bush, Obama, and Trump from clear and indisputable illegal acts defined in international law established by the US itself as war crimes against the inhabitants of Afghanistan, Iraq, Libya, Pakistan, Syria, Yemen, and Somalia. We can add to this an eighth example: The military attacks by the US armed and supported neo-Nazi puppet state of Ukraine against the breakaway Russian provinces.

The massive deaths, destruction of towns, cities, infrastructure, the maiming, physical and mental, the dislocation that has sent millions of refugees fleeing Washington’s wars to overrun Europe, where governments consist of a collection of idiot stooges who supported Washington’s massive war crimes in the Middle East and North Africa, produced no outcry comparable to Trump’s immigration policy.

How can it be that Americans can see inhumanity in the separation of families in immigration enforcement but not in the massive war crimes committed against peoples in eight countries? Are we experiencing a mass psychosis form of cognitive dissonance?

We now move to the second example: Washington’s withdrawal from the United Nations Human Rights Council.

On November 2, 1917, two decades prior to the holocaust attributed to National Socialist Germany, British Foreign Secretary Arthur James Balfour wrote to Lord Rothschild that Great Britain supported Palestine becoming a Jewish homeland. In other words, the corrupt Balfour dismissed the rights and lives of the millions of Palestinians who had occupied Palestine for two millennia or more. What were these people compared to Rothschild’s money? They were nothing to the British Foreign Secretary.

Balfour’s attitude toward the rightful inhabitants of Palestine is the same as the British attitude toward the peoples in every colony or territory over which British power prevailed. Washington learned this habit and has consistently repeated it.

Just the other day Trump’s UN ambassador Nikki Haley, the crazed and insane lapdog of Israel, announced that Washington had withdrawn from the UN Human Rights Council, because it is “a cesspool of political bias” against Israel.

What did the UN Human Rights Council do to warrant this rebuke from Israel’s agent, Nikki Haley? The Human Rights Council denounced Israel’s policy of murdering Palestinians—medics, young children, mothers, old women and old men, fathers, teenagers.

To criticize Israel, no matter how great and obvious is Israel’s crime, means that you are an anti-semite and a “holocaust denier.” For Nikki Haley and Israel, this places the UN Human Rights Council in the Hitler-worshipping Nazi ranks.

The absurdity of this is obvious, but few, if any, can detect it. Yes, the rest of the world, with the exception of Israel, has denounced Washington’s decision, not only Washington’s foes and the Palestinians, but also Washington’s puppets and vassals as well.

To see the disconnect, it is necessary to pay attention to the wording of the denunciations of Washington.

A spokesperson for the European Union said that Washington’s withdrawal from the UN Human Rights Council “risks undermining the role of the US as a champion and supporter of democracy on the world stage.” Can anyone image a more idiotic statement? Washington is known as a supporter of dictatorships that adhere to Washington’s will. Washington is known as a destroyer of every Latin American democracy that elected a president who represented the people of the country and not the New York banks, US commercial interests, and US foreign policy.

Name one place where Washington has been a supporter of democracy. Just to speak of the most recent years, the Obama regime overthrew the democratically elected government of Honduras and imposed its puppet. The Obama regime overthrew the democratically elected government in Ukraine and imposed a neo-Nazi regime. Washington overthrew the governments in Argentina and Brazil, is trying to overthrow the government in Venezuela, and has Bolivia in its crosshairs along with Russia and Iran.

Margot Wallstrom, Sweden’s Foreign Minister, said: “It saddens me that the US has decided to withdraw from the UN Human Rights Council. It comes at a time when the world needs more human rights and a stronger UN – not the opposite.” Why in the world does Wallstrom think that the presence of Washington, a known destroyer of human rights—just ask the millions of refugees from Washington’s war crimes overrunning Europe and Sweden—on the Human Rights Council would strengthen rather than undermine the Council? Wallstrom’s disconnect is awesome. It is so extreme as to be unbelievable.

Australia’s Foreign Minister, Julie Bishop, spoke for the most fawning of all of Washington’s vassals when she said that she was concerned by the UN Human Rights Council’s “anti-Israel bias.” Here you have a person so utterly brainwashed that she is unable to connect to anything real.

The third example is the “trade war” Trump has launched against China. The Trump regime’s claim is that due to unfair practices China has a trade surplus with the US of nearly $400 billion. This vast sum is supposed to be due to “unfair practices” on China’s part. In actual fact, the trade deficit with China is due to Apple, Nike, Levi, and to the large number of US corporations who produce offshore in China the products that they sell to Americans. When the offshored production of US corporations enter the US, they are counted as imports.

I have been pointing this out for many years going back to my testimony before the US Congress China Commission. I have written numerous articles published almost everywhere. They are summarized in my 2013 book, The Failure of Laissez Faire Capitalism.

The presstitute financial media, the corporate lobbyists, which includes many “name” academic economists, and the hapless American politicians whose intellect is almost non-existent are unable to recognize that the massive US trade deficit is the result of jobs offshoring. This is the level of utter stupidity that rules America.

In The Failure of Laissez Faire Capitalism, I exposed the extraordinary error made by Matthew J. Slaughter, a member of President George W. Bush’s Council of Economic Advisers, who incompetently claimed that for every US job offshored two US jobs were created. I also exposed as a hoax a “study” by Harvard University professor Michael Porter for the so-called Council on Competitiveness, a lobby group for offshoring, that made the extraordinary claim that the US work force was benefitting from the offshoring of their high productivity, high value-added jobs.

The idiot American economists, the idiot American financial media, and the idiot American policymakers still have not comprehended that jobs offshoring destroyed America’s economic prospects and pushed China to the forefront 45 years ahead of Washington’s expectations.

*  *  *

To sum this up, the Western mind, and the minds of the Atlanticist Integrationist Russians and pro-American Chinese youth, are so full of propagandistic nonsense that there is no connection to reality.

There is the real world and there is the propagandistic made-up world that covers over the real world and serves special interests. My task is to get people out of the made-up world and into the real world. Support my efforts.

Published:6/21/2018 11:21:43 PM
[Entertainment] Ashley Iaconetti's Advice for ''Perpetually Single'' Girls Like Her Is Spot On Ashley Iaconetti, Jared HaibonAshley Iaconetti is the first to admit she's had to kiss a few frogs before finding her Prince Charming. The Bachelor in Paradise star recently got engaged to Jared Haibon, the fairy...
Published:6/21/2018 9:21:12 PM
[Entertainment] How Rihanna Enhances Her Best Assets--and How You Can, Too ESC: RihannaLet's be real: One size does not fit all. Some of us are built curvier. Some like their collarbones more; others, their legs. No matter what shape you are, there's a way to...
Published:6/21/2018 8:52:13 PM
[World] 'Roseanne' spinoff: If the Conners have to come back, make it about Darlene "Roseanne" is coming back without Roseanne Barr in a new spin-off called "The Conners." But if they're reworking the family's story yet again, can Darlene (Sara Gilbert) finally take center stage?
     
 
 
Published:6/21/2018 8:52:13 PM
[Entertainment] Roseanne Is Officially Being Rebooted Without Roseanne Roseanne, Roseanne RevivalABC isn't letting go of Roseanne that easily. Just a few weeks week after ABC Entertainment president Channing Dungey abruptly canceled the extremely popular Roseanne reboot due to...
Published:6/21/2018 8:22:28 PM
[Entertainment] 'Roseanne' spinoff: If the Conners have to come back, they can do one thing right "Roseanne" is coming back without Roseanne Barr in a new spin-off called "The Conners." But if they're reworking the family's story yet again, can Darlene (Sara Gilbert) finally take center stage?
     
 
 
Published:6/21/2018 8:22:27 PM
[Markets] Nomi Prins: How Donald Trump's Trade Wars Could Lead To A Great Depression

Authored by Nomi Prins via TomDispatch.com,

Imperial President or Emperor With No Clothes?

Leaders are routinely confronted with philosophical dilemmas. Here’s a classic one for our Trumptopian times: If you make enemies out of your friends and friends out of your enemies, where does that leave you?

What does winning (or losing) really look like? Is a world in which walls of every sort encircle America’s borders a goal worth seeking? And what would be left in a future fragmented international economic system marked by tit-for-tat tariffs, travel restrictions, and hyper-nationalism? Ultimately, how will such a world affect regular people?

Let’s cut through all of this for the moment and ask one crucial question about our present cult-of-personality era in American politics: Other than accumulating more wealth and influence for himself, his children, and the Trump family empire, what’s Donald J. Trump’s end game as president? If his goal is to keep this country from being, as he likes to complain, “the world’s piggy bank,” then his words, threats, and actions are concerning. However bombastic and disdainful of a history he appears to know little about, he is already making the world a less stable, less affordable, and more fear-driven place. In the end, it’s even possible that, despite the upbeat economic news of the moment, he could almost singlehandedly smash that piggy bank himself, as he has many of his own business ventures.

Still, give him credit for one thing: Donald Trump has lent remarkable new meaning to the old phrase “the imperial presidency.” The members of his administration, largely a set of aging white men, either conform to his erratic wishes or get fired. In other words, he’s running domestic politics in much the same fashion as he oversaw the boardroom on his reality TV show The Apprentice.

Now, he’s begun running the country’s foreign policy in the same personalized, take-no-prisoners, you’re-fired style. From the moment he hit the Oval Office, he’s made it clear at home and abroad that it’s his way or the highway. If only, of course, it really was that simple. What he will learn, if “learning process” and “President Trump” can even occupy the same sentence, is that “firing” Canada, the European Union (EU), or for that matter China has a cost.

What the American working and the middle classes will see (sooner than anyone imagines) is that actions of his sort have unexpected global consequences. They could cost the U.S. and the rest of the world big time. If he were indeed emperor and his subjects (that would be us) grasped where his policies might be leading, they would be preparing a revolt. In the end, they -- again, that’s us -- will be the ones paying the price in this global chess match.

The Art of Trump’s Deals

So far, President Trump has only taken America out of trade deals or threatened to do so if other countries don’t behave in a way that satisfies him. On his third day in the White House, he honored his campaign promise to remove the U.S. from the Trans Pacific Partnership, a decision that opened space for our allies and competitors, China in particular, to negotiate deals without us. Since that grand exit, there has, in fact, been a boom in side deals involving China and other Pacific rim countries that has weakened, not strengthened, Washington’s global bargaining position. Meanwhile, closer to home, the Trump administration has engaged in a barrage of NAFTA-baiting that is isolating us from our regional partners, Canada and Mexico.

Conversely, the art-of-the-deal aficionado has yet to sign a single new bilateral trade deal. Despite steadfast claims that he would serve up the best deals ever, we have been left with little so far but various tariffs and an onslaught against American trading partners. His one claim to bilateral-trade-deal fame was the renegotiation of a six-year-old deal with South Korea in March that doubled the number of cars each U.S. manufacturer could export to South Korea (without having to pass as many safety standards).

As White House Press Secretary Sarah Sanders put it, when speaking of Kim Jong-un’s North Korea, “The President is, I think, the ultimate negotiator and dealmaker when it comes to any type of conversation...” She left out the obvious footnote, however: any type that doesn’t involve international trade.

In the past four months, Trump has imposed tariffs, exempting certain countries, only to re-impose them at his whim. If trust were a coveted commodity, when it came to the present White House, it would now be trading at zero. His supporters undoubtedly see this approach as the fulfillment of his many campaign promises and part of his classic method of keeping both friends and enemies guessing until he’s ready to go in for the kill. At the heart of this approach, however, lies a certain global madness, for he now is sparking a set of trade wars that could, in the end, cost millions of American jobs.

The Allies

On May 31st, Commerce Secretary Wilbur Ross confirmed that Canada, Mexico, and the EU would all be hit with 10% aluminum and 25% steel tariffs that had first made headlines in March. When it came to those two products, at least, the new tariffs bore no relation to the previous average 3% tariff on U.S.-EU traded goods.

In that way, Trump’s tariffs, initially supposed to be aimed at China (a country whose president he’s praised to the skies and whose trade policies he’s lashed out at endlessly), went global. And not surprisingly, America’s closest allies weren’t taking his maneuver lightly. As the verbal abuse level rose and what looked like a possible race to the bottom of international etiquette intensified, they threatened to strike back.

In June, President Trump ordered that a promised 25% tariff on $50 billionworth of imported goods from China also be imposed. In response, the Chinese, like the Europeans, the Canadians, and the Mexicans, immediately promised a massive response in kind. Trump countered by threatening another $200 billion in tariffs against China. In the meantime, the White House is targetting its initial moves largely against products related to that country’s "Made in China 2025" initiative, the Chinese government's strategic plan aimed at making it a major competitor in advanced industries and manufacturing.

Meanwhile, Mexico began adopting retaliatory tariffs on American imports. Although it has a far smaller economy than the U.S., it’s still the second largest importer of U.S. products, buying a whopping $277 billion of them last year. Only Canada buys more. In a mood of defiance stoked by the president’s hostility to its people, Mexico executed its own trade gambit, imposing $3 billion in 15%-25% tariffs against U.S. exports, including pork, apples, potatoes, bourbon, and cheese.

While those Mexican revenge tariffs still remain limited, covering just 1% of all exports from north of the border, they do target particular industries hard, especially ones that seem connected to President Trump’s voting “base.” Mexico, for instance, is by far the largest buyer of U.S. pork exports, 25% of which were sold there last year. What its 20% tariff on pork means, then, is that many U.S. producers will now find themselves unable to compete in the Mexican market. Other countries may follow suit. The result: a possible loss of up to 110,000 jobs in the pork industry.

Our second North American Free Trade Agreement (NAFTA) partner (for whose prime minister, Justin Trudeau, there is “a special place in hell,” according to a key Trumpian trade negotiator) plans to invoke tariffs of up to 25% on about $13 billion in U.S. products beginning on July 1st. Items impacted range “from ballpoint pens and dishwasher detergent to toilet paper and playing cards... sailboats, washing machines, dish washers, and lawn mowers.” Across the Atlantic, the EU has similarly announced retaliatory tariffs of 25% on 200 U.S. products, including such American-made classics as Harley-Davidson motorcycles, blue jeans, and bourbon.

Trump Disses the Former G7

As the explosive Group of Seven, or G7, summit in Quebec showed, the Trump administration is increasingly isolating itself from its allies in palpable ways and, in the process, significantly impairing the country’s negotiating power. If you combine the economies of what might now be thought of as the G6 and add in the rest of the EU, its economic power is collectively larger than that of the United States. Under the circumstances, even a small diversion of trade thanks to Trump-induced tariff wars could have costly consequences.

President Trump did try one “all-in” poker move at that summit. With his game-face on, he first suggested the possibility of wiping out all tariffs and trade restrictions between the U.S. and the rest of the G7, a bluff met with a healthy dose of skepticism. Before he left for his meeting with North Korean leader Kim Jong-un in Singapore, he even suggested that the G7 leaders “consider removing every single tariff or trade barrier on American goods.” In return, he claimed he would do the same “for products from their countries.” As it turned out, however, that wasn’t actually a venture into economic diplomacy, just the carrot before the stick, and even it was tied to lingering threats of severe penalties.

The current incipient trade war was actually launched by the Trump administration in March in the name of American “national security.” What should have been highlighted, however, was the possible “national insecurity” in which it placed the country’s (and the world’s) future. After all, a similar isolationist stance in the 1920s and the subsequent market crash of 1929 sparked the global Great Depression, opening the way for the utter devastation of World War II.

European Union countries were incredulous when Trump insisted, as he had many times before, that the “U.S. is a victim of unfair trade practices,” citing the country’s trade deficits, especially with Germany and China. At the G7 summit, European leaders did their best to explain to him that his country isn’t actually being treated unfairly. As French President Emmanuel Macron explained, “France runs trade deficits with Germany and the United Kingdom on manufactured goods, even though all three countries are part of the EU single market and have zero tariffs between them.”

Having agreed to sign on to a post-summit joint statement, the president suddenly opted out while on his flight to Singapore, leaving his allies in the lurch (and subsequently slamming the Canadian prime minister as “very dishonest” and “weak”). In that communiqué, signed by the other six summit attendees, they noted, "We strive to reduce tariff barriers, non-tariff barriers, and subsidies... We acknowledge that free, fair and mutually beneficial trade and investment, while creating reciprocal benefits, are key engines for growth and job creation."

The Pushback

The fallout domestically from the coming trade wars could be horrific if Trump truly makes good on his promises and refuses to back down, while the countries he’s attacking ratchet up their own responses, whether in terms of tariffs or simply a refusal to buy American goods. According to the U.S. Chamber of Commerce, up to 2.6 million American jobs could be threatened if, in the process, the U.S. also withdraws from NAFTA.

Even American CEOs are now running scared of the CEO-in-chief. recent survey conducted by the Business Roundtable lobby group, chaired by JPMorgan Chase CEO Jamie Dimon, revealed that their “economic outlook index” had declined this past quarter from a record high, the first drop in two years. According to the report, nearly two-thirds of the CEOs surveyed considered trade policy a "serious risk." Rather than planning future corporate hiring sprees, as Trump might have us believe, their fears of future trade wars actually seem to be curtailing job-expansion plans.

European leaders at the G7 summit admitted that, despite their own role in escalating global trade tensions, the coming wars “would hurt everyone.” And therein lies the danger and the disconnect. Thanks largely to Donald Trump, the leaders of the key countries on the planet could now proceed to destroy trade relationships, knowing full well that the results will hurt their workers and damage the global economy.

A recent report by Andy Stoeckel and Warwick McKibbin for the Brookings Institution analyzed just such a future trade war scenario and found that, if global tariffs were to rise just 10%, the gross national product (GDP) of most countries would fall by between 1% and 4.5% -- the U.S. GDP by 1.3%, China’s by 4.3%. A 40% rise in tariffs would ensure a deep global recession or depression. In the 1930s, it was the punitive U.S. Smoot-Hawley tariff that helped spark the devastating cocktail of nationalism and economic collapse that culminated in World War II. This time, who knows what The Donald’s tariffs will spark?

The End Game

When trade wars escalate and geopolitical tensions rise, economies can be badly damaged, leading to a vicious cycle of aggressive responses. And here’s the remarkable thing about the power of America’s imperial presidency in 2018: Donald Trump could unilaterally slow, alter, or under certain circumstances even shut down various elements of global trade -- and if he manages to do so, there will be a price to pay in jobs and in this planet’s economic stability.

Catalyzed by tweets, denunciations, insults, and the tariff-first shots of his administration, our allies will undoubtedly try to trade more with each other to close gaps that his trade wars open. Ultimately, that will hurt the U.S. and its workers, especially Trump’s base. For instance, German carmaker BMW, Japanese carmaker Toyota, and other foreign car companies employ 130,000 people in the United States. If, in response to new tariffs on their products, they were to begin moving their operations to France or Mexico in retaliation, it's American workers who would lose out.

But make no mistake: American allies, who rely on the staggeringly powerful U.S. market, will lose out, too. Weighed down by tariffs, their products will become less competitive here, which is what Trump wants. However, that won’t necessarily mean the end of trade deficits; it could just mean less trade everywhere, a situation that should bring to mind the global depression of the 1930s. And if you think Donald Trump is already a threat to world stability, imagine what might happen after years of economic duress. As was the case in the 1930s, when volatile conditions made it easier for dictators like Adolf Hitler to convince people that their economic woes stemmed from others, the path to a fire-and-fury world remains grimly open.

In Washington, Donald Trump’s unique version of the imperial presidency seems to be expanding to fill any void as alliances like the G7 that were once so crucial to the way the United States dominated much of the planet and its economy are being diminished. The question that should make anybody nervous is not yet answerable: What’s the end game?

The global economic system first put in place after World War II was no longer working particularly well even before President Trump’s trade wars began. The problem now is that its flaws are being exacerbated. Once it becomes too expensive for certain companies to continue operating as their profits go to tariffs or tariffs deflect their customers elsewhere (or nowhere), one thing is certain: it will get worse.

*  *  *

Nomi Prins is a TomDispatch regular. Her latest book, Collusion: How Central Bankers Rigged the World (Nation Books), was just published. Of her six other books, the most recent is All the Presidents' Bankers: The Hidden Alliances That Drive American Power. She is a former Wall Street executive. Special thanks go to researcher Craig Wilson for his superb work on this piece.

Published:6/21/2018 7:52:41 PM
[Entertainment] 'Roseanne' spinoff: ABC picks up 'The Conners,' minus Roseanne Barr ABC Thursday picked up 10 episodes of a 'Roseanne' spinoff, 'The Conners,' featuring the main cast except for Roseanne Barr. ABC canceled 'Roseanne' in May after a racist tweet by Barr.
     
 
 
Published:6/21/2018 7:52:41 PM
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Published:6/21/2018 7:20:53 PM
[Markets] Flynn Evidence May Have Been Tampered With By FBI: GOP Lawmaker

Rep Mark Meadows (R-NC) suggested on a Thursday interview with The Hill that evidence in the Mike Flynn case may have been tampered with - something long hinted at by insiders close to the Congressional investigations. 

Meadows, the leader of the conservative House Freedom Caucus and a close ally of President Trump's, said he and other lawmakers are finding evidence of possible tampering, an allegation he previously made at a House hearing where Justice Department Inspector General Michael Horowitz testified. -The Hill

"Justice should be meted out evenly, and yet we’re finding that evidence could have been tampered with," Meadows said.

In particular, Meadows pointed to the "302" reports - which are summaries of FBI interviews with suspects or witnesses. 

"I brought this up with the inspector general the other day.  Some of those key witness will be asked to appear before House Oversight," he added.

The question about the FBI interview reports, he said, was "were they changed to change the outcome of prosecution decisions. I think they might have."

"We’re not going to yield until we get an answer," he added. -The Hill

During Tuesday testimony in front of a joint hearing of the House Judiciary and Oversight committee, IG Horowitz said he is investigating allegations that FBI officials "edited" agents' 302 forms. 

It has been long suspected that fired Deputy FBI Director Andrew McCabe had agents edit or delete the "302" forms created after former National Security Advisor Michael Flynn's interview. 

Journalist Sara Carter - known of late for her access to leaks by "white hat" actors in the intelligence community, sat down with Sean Hannity in late January where she discussed McCabe's firing and suggested "there's indicators right now that McCabe may have asked FBI agents to actually change their 302's

Hannity: A source of mine told me tonight that when Wray read this, it shocked him to his core.

Sara Carter: Shocked him to his core, and not only that, the Inspector General's report - I have been told tonight by a number of sources, there's indicators right now that McCabe may have asked FBI agents to actually change their 302's - those are their interviews with witnesses. So basically every time an FBI agent interviews a witness, they have to go back and file a report. 

As we noted on Tuesday, altered 203 forms may also explain why the judge in Flynn's case ordered Special Counsel Robert Mueller to turn over any "exculpatory evidence" to Flynn's defense team. Flynn's legal team did not make this request. Instead, Judge Emmet G. Sullivan issued the order "sua sponte," or at his discretion, invoking the "Brady Rule" - which requires prosecutors to turn over previously unfiled evidence that might have a material impact on a defendant's case. Interestingly, two days before the order Mueller filed a motion for an agreed-upon protective order regarding the use of evidence in the case, including "sensitive materials," provided to Flynn's lawyers by the office of the Special Counsel.

It may also explain why Mueller has agreed to postpone Flynn's sentencing "due to the status of the special counsel's investigation." 

Flynn pleaded guilty in December to lying to the FBI in connection with special counsel Robert Mueller's investigation. Some have suggested he did so in order to avoid a lengthy and costly legal battle with the DOJ, while others think he did so in order to protect his son, Michael Flynn Jr., from enhanced FBI probing. 

Published:6/21/2018 7:20:53 PM
[Money & The Economy] Household Debt to Surpass 2008 Peak by $1 Trillion

By Carl Fox -

A report released Thursday finds that American household debt is currently on pace to exceed the prior peak debt level from 2008 by the end of June, primarily due to non-mortgage consumer debt. LendingTree’s Consumer Debt Outlook for June 2018, an anlysis of the latest Federal Reserve data, found that mortgage-related household debt has actually ...

Household Debt to Surpass 2008 Peak by $1 Trillion is original content from Conservative Daily News - Where Americans go for news, current events and commentary they can trust.

Published:6/21/2018 6:50:36 PM
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[Entertainment] Kate Spade Laid to Rest in Hometown Funeral Designer, Kate SpadeFamily and friends said goodbye to designer Kate Spade today in a private funeral service. The fashion icon was laid to rest this morning in Kansas City while family, friends and fans...
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Published:6/21/2018 6:20:30 PM
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Published:6/21/2018 5:23:47 PM
[Markets] Report: New US Coalition Airstrikes On Government Positions In Eastern Syria

Though as yet unconfirmed in other international sources, Russian and Syrian state media are reporting major US coalition airstrikes in eastern Syria which left multiple civilians and at least one Syrian soldier dead.  

Syria's SANA reports eight civilians killed and many injured during US coalition airstrikes on al-Sha’afa village in Deir Ezzor countryside on Thursday. 

The unconfirmed breaking story cites "civil sources" in the region of the strikes to report that "at least eight citizens were killed, many others were injured and huge destruction affected the houses after warplanes of the US-led international coalition carried out many raids on the citizens’ houses."

Early this week the Syrian government accused the US of conducting massive airstrikes on government forces near Abu Kamal along the Iraq-Syria border, after which the US coalition spokesman issued a formal denial. An unnamed US official later told CNN that Israel actually carried out the attack, which reportedly killed scores of Syrian Army and Iraqi paramilitary forces carrying out an anti-ISIS campaign in the area on Sunday.

Neither Israel nor the US officially acknowledged responsibility for the Sunday airstrikes, and no official recognition of Thursday's alleged strikes has been forthcoming. 

Meanwhile Sputnik reports on what appears to be *a separate incident:*

At least one Syrian soldier was killed in a US-led coalition airstrike on Syrian army positions in the east of Homs province on Thursday, a Syrian field commander told Sputnik.

"The combat planes belonging to the coalition led by the United States, attacked the army position in Jabal Ghurab, some 150 kilometers [93 miles] east of Palmyra near the border with Iraq," the commander said.

"One serviceman was killed and several others wounded," he added.

A CNN reporter confirms that hostilities indeed broke out in the region:

Sources who spoke to Sputnik say the serviceman was a Syrian officer who was part of a unit engaged in return fire on US coalition vehicles:

According to a Syrian field commander, the sudden US-led coalition air assault occurred after Syrian forces responded to an open fire from three coalition's vehicles, moving towards positions of governmental forces.

And significantly, Sputnik reports further that the firefight involved coalition vehicles from al-Tanf base: "According to a Syrian field commander, coalition vehicles were spotted moving away from Al Tanf district, where the US-led coalition base is situated."

The reports of fresh US attacks in Syria's East come the same day the US State Department issued vague warnings against Damascus not to extend its military campaign to the country's south: “The United States remains deeply troubled by reports of increasing Syrian regime operations in southwest Syria within the boundaries of the de-escalation zone negotiated between the United States, Jordan, and the Russian Federation last year and reaffirmed between Presidents Trump and Putin in Da Nang, Vietnam in November,” spokesperson Heather Nauert said.

“The Syrian regime military and militia units, according to our reports, have violated the southwest de-escalation zone and initiated airstrikes, artillery, and rocket attacks,” Nauert continued. "The United States continues to warn both the Russian government and the Assad regime of the serious repercussions of these violations and demands that Russia restrain pro-regime forces from further actions within the southwest de-escalation zone."

Developing story...

Published:6/21/2018 5:23:46 PM
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Published:6/21/2018 3:50:58 PM
[Markets] Fed Finds All 35 Banks Will Be Fine If Stocks Crash by 65%, VIX Hits 60

The Fed has released the results of its most recent Dodd-Frank Stress Tests. All US banks were expected to pass (and are likely to lift the amount of money they send to shareholders via dividends and buybacks) but as Bloomberg notes, eyes are on smaller banks, which may have better-than-anticipated results and capital plans.

As a reminder, in the severely adverse scenario, asset prices drop sharply in this scenario. Equity prices fall 65 percent by early 2019, accompanied by a surge in equity market volatility. The U.S. market volatility index (VIX) moves above 60 percent in the first half of 2018. Real estate prices also experience large declines, with house prices and commercial realestate prices falling 30 percent and 40 percent, respectively, by the third quarter of 2019... but notably all of these adverse shifts revert back to normal after a few years.

And sure enough, all 35 banks reviewed cleared the first hurdle of the Fed's stress tests.

The most severe hypothetical scenario projects $578 billion in total losses for the 35 participating bank holding companies during the nine quarters tested. The "severely adverse" scenario, the most stringent scenario yet used in the Board's stress tests, features a severe global recession with the U.S. unemployment rate rising by almost 6 percentage points to 10 percent, accompanied by a steepening Treasury yield curve.

The firms' aggregate common equity tier 1 capital ratio, which compares high-quality capital to risk-weighted assets, would fall from an actual level of 12.3 percent in the fourth quarter of 2017 to a minimum level of 7.9 percent in the hypothetical stress scenario. Since 2009, the 35 firms have added about $800 billion in common equity capital.

"Despite a tough scenario and other factors that affected this year's test, the capital levels of the firms after the hypothetical severe global recession are higher than the actual capital levels of large banks in the years leading up to the most recent recession," Vice Chairman Randal K. Quarles said.

In other words, according to the Fed's stress test, if stock prices drop 65% and VIX soars above 60, all 35 banks will be ok...

Federal Reserve stress test results show Goldman Sachs had a minimum supplementary leverage ratio (SLR) of 3.1, just exceeding the required 3.0 minimum the Fed set for its annual capital plan review to be released next week. GS’s tested SLR was the lowest among participating banks; Morgan Stanley was next, at 3.3, followed by State Street at 3.7; those were the only banks below 4.0.

State Street was the closest to minimum on Equity Tier 1 Capital.

 

Summing it all up: The next time the market crashes by 65%, the Fed's "stress test" will be Exhibit A why there will be no taxpayer bailouts: they can all survive on their own.

*  *  *

Full Results:

morgan stanley

The Fed will announce the CCAR results next week.

*  *  *

Things have not gone well for bank shareholders in the few months since The Fed's last Stress Test (and CCAR) results...as the stress test scenarios, released in February, were tougher than had been expected.

The 'big' US banks have dramatically underperformed the 'small' US banks.

For the US biggest banks, it has been ugly...

The picture for the world's biggest banks is even worse... down over 20%...

*  *  *

But, but, but... fortress balance sheets? Rising yields and NIM? Volatility is back for trading revenues?

 

 

 

 

 

 

 

 

 

Published:6/21/2018 3:50:58 PM
[Markets] Dow Ties Worst Losing Streak In 40 Years

This is easy...

The brief respite for Chinese stocks disappeared overnight...

And it appears to be finally leaking into American stock markets too...

 

The Dow closed red... again... for the 8th day in a row...

 

There has not been a longer Dow losing streak since 1978!!

 

The Dow is down over 1% YTD while Nasdaq is up almost 12%...

 

This is the worst year-to-date divergence between Dow/Nasdaq since 2009...

 

Is the short-squeeze over? "Most Shorted" stocks suffered their biggest down day since April 6th today (but even then they tried to squeeze the open)...

NOTE - this was only the 2nd down day for the "most shorted" stocks in June (down 3 of the last 21 days)

 

Another day, another dip in FANG stocks bought (though ended lower on the day)...

 

Amazon was down but nothing like as bad as many of the other online retailers (after SCOTUS' decision)...

 

VIX traded back above 15 today...

 

As we suspect the vol term structure is starting to wake up to the looming reality of the actual imposition of the trade tariffs and retaliations...

 

Treasuries were bid today with yields down 3-5bps, pushing all yields lower on the week...

 

The Dollar Index took a dive early on (but cable was the big gainer that led the way in the majors on the back of a hawkish BoE)...

 

While the drop felt notable (it was the biggest daily drop in June) - compared to last week's ECB surge it was a storm in a teacup...

 

Longer-term it seems the dollar index is stuck in resistance...

 

Cryptos leaked lower all day today, no major catalyst evident...

 

On the day copper was the biggest loser with WTI, gold, and silver unchanged; but on the week so far, quite a divergence...

 

WTI ended the day unchanged after testing down towards a $64 handle and above a $66 handle ahead of OPEC...

 

Notably, the massive discounts for Permian crude tumbled today...

 

And as we reflect on the oil complex ahead of tomorrow's OPEC decision, we thought this might be useful...

 

Published:6/21/2018 3:21:50 PM
[Entertainment] 11 Major Celebrity Beauty Looks in Honor of National Selfie Day ESC: Chrissy TeigenHappy National Selfie Day! (Yes, it is a thing.) On a day that celebrates individuality, confidence and some unapologetic self-promotion, there's a lot of beauty to embrace....
Published:6/21/2018 3:21:50 PM
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Published:6/21/2018 2:25:44 PM
[Markets] BofA: 40% Of Margin Expansion In The Last 20 Years Is From Globalization

Roughly around the time David Rosenberg "calculated" the contribution of the Fed's unprecedented monetary policy on the S&P (which he estimated at roughly 1,000 points, which is about half of what Albert Edwards believes the Fed "added" to the stock market), Bank of America was out with an analysis, this time looking at the contribution "globalization" has had on global corporate margins. The reason: an attempt to handicap the potential risks from all-out trade war which leads to the unwind of "globalization", by which we assume the bank refers to global supply chains, JIT procurement, lower wages for US-based workers, grassroots anger with the status quo, and so on.

As BofA's Savita Subramanian writes, the key risk to equities following Trump's election "was a shift from globalization to protectionism, which could choke off growth for a very global index - one-third of sales are from overseas, and indirect exposure via commodities, FX, etc. is inestimable."

As for the key reason why corporations, banks and shareholders everywhere are terrified by the prospect of "globalization" going in reverse is because as noted above, BofA calculates, it has boosted 40% of the rise in S&P500 margins over the last two decades, largely due to lower taxes from offshoring and, of course, lower compensation, i.e. wages - the biggest catalyst behind the ongoing nationalist/populist tide against the status quo.

Visually:

So why is BofA worried? Well, should trade war indeed send globalization in reverse, the most globally-oriented sectors - Tech, Energy, Industrials, Materials - could see both margins and multiples hurt in such a shift according to Subramanian.

Another risk: the pickup in capex has been led by big multinationals, which could be stymied by uncertainly around tariffs. So far, there are no signs of this - capex guidance remains above avg., and S&P companies have cited capex as their key use of tax reform proceeds.

Putting it together, what is the risk to overall EPS? Recall that last week Barclays estimated that the threat to S&P earnings was roughly an 11% drop if 10% tariffs are enacted across the board.

What about BofA? Using input cost data from the BEA, the bank estimates that a 10% increase in import costs would equate to a 3-4% hit to S&P 500 EPS (assuming foreign sales fall by =2%), and a ~50bp hit to operating margins.

It is worth noting that while tech is the biggest contributor to S&P earnings, not all industries might be impacted by trade wars. For example, China consumes $120bn+ of semis, these are used to produce $700bn+ in finished electronics, and given the absence of local substitutes, it is hard to argue that tariffs would have a sizable longer term impact on US chip imports. For other industries, the impact is more evident with BofA especially concerned about tariffs in an industry, like retail, with limited pricing power where production shifts could take years.

So, according to BofA, what is the worst possible outcome? Here is Subramanian's take:

Worst outcome = stagflation: global growth would suffer despite local inflation. An IMF simulation found that if the US, China and Europe each raised import prices by 10%, GDP would drop by 2-3% in all three regions, not including second-order impacts (confidence, etc.). Tariffs + higher oil prices = "bad" inflation that could offset the consumption boost from higher wages/tax reform.

Or, to summarize, "we see stagflation as the biggest risk to equities."

Which is ironic, because even without a "trade war" the US is already headed there, thanks to surging input costs and rising inflationary pressures, while GDP growth is set to slump going forward according to Goldman.

In other words, we are already there.

Published:6/21/2018 2:25:44 PM
[Entertainment] Love Island's Sophie Gradon Dead at 32 Sophie GradonBritish star Sophie Gradon, who appeared on the reality dating show Love Island, has passed away at the age of 32. "At about 8:27 p.m. yesterday (20 June) police attended a property...
Published:6/21/2018 1:48:48 PM
[Markets] Inflation Fears Spike To 30 Year Highs

Hidden deep in the narrative-busting Philly Fed survey plunge this morning was an alarming data point that may better explain the slump in stocks than mere disappointing headlines would suggest.

While Prices Paid and Prices Received both rose modestly (even as New Orders and Backlogs plunged), it appears Trump Trade Tariffs have sparked a Daimler-esque response in the business-people of Philadelphia who are now more worried about inflation in the next 6 months than at any time since 1988 (shooting up a whopping 23 points to 56.6)...

But what the chart says is more concerning for the average joe as this is the bank’s six-month outlook index for prices received by producers - in other words: what consumer prices are expected to do.

While the gauges are volatile and expectations often differ from reality, Bloomberg notes that the increase is consistent with the trend of budding cost pressures and shows manufacturers are going to test the end-market’s tolerance of higher prices.

So, should Treasury yields be anxious about this? You decide...

As MacroTourist Kevin Muir retorted previously: "It’s foolish to believe that the end-game is anything but inflation."

Published:6/21/2018 1:48:48 PM
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Published:6/21/2018 1:19:52 PM
[Entertainment] Demi Lovato Sings About Breaking Sobriety in "Sober" Song Demi Lovato, SoberDemi Lovato sings about not being sober anymore in a new single. This past March, the 25-year-old singer celebrated maintaining six years of sobriety. Lovato has for years been open about...
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[Entertainment] Kim Kardashian Returns to Paris for the First time Since 2016 Robbery Kim KardashianKim Kardashian is back in Paris, a year and a half after she was robbed at gunpoint at a hotel in the city. The 37-year-old Keeping Up With the Kardashians star was photographed in the...
Published:6/21/2018 12:18:35 PM
[Politics] Can Robots Replace Workers? Americans Think It's Likely

A report released in November found that as many as 800 million workers worldwide could be replaced by robots by 2030. That’s not shocking to most Americans, but they also don’t believe they are easily replaceable.

A new Rasmussen Reports national telephone and online survey finds that 64% of American Adults think it’s at least Somewhat Likely that most jobs in America will be done by robots or computers 25 years from now, including 21% who believe it’s Very Likely. Thirty percent (30%) don’t think that scenario is likely, with five percent (5%) who feel it’s Not at all Likely. (To see survey question wording, click here.)

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The survey of 1,000 American Adults was conducted on June 17-18, 2018 by Rasmussen Reports. The margin of sampling error is +/- 3 percentage points with a 95% level of confidence. Field work for all Rasmussen Reports surveys is conducted by Pulse Opinion Research, LLC. See methodology.

Published:6/21/2018 12:18:35 PM
[Entertainment] Kristin Cavallari Is a Total Boss on Very Cavallari and We Have the LOL-Worthy Clips to Prove It! Kristin Cavallari, Daily PopKristin Cavallari is a total boss! In addition to juggling the responsibilities of marriage and motherhood, the former MTV star also runs her flourishing lifestyle brand Uncommon James....
Published:6/21/2018 11:20:08 AM
[Markets] Trade Wars And Charles Dow's Best Saying

Authored by Nicholas Colas via DataTrekResearch.com,

“The one fact pertaining to all conditions is that they will change.” 
- Charles Dow

We start with that quote because today’s note is about the Dow Jones Industrial Average and, of course, about change. The easy bit first: GE is leaving the Dow after being there for 111 years – longer than any other company. The company replacing it, Walgreens Boots Alliance, is all of 4 years old in its current form. At a closing price of $65, it will have roughly 5x more influence on the Dow than GE with its $13 price.

Why Walgreens and not Amazon or Google? Ironically, it is because Charles Dow’s namesake market measurement didn’t anticipate change. Specifically, he never envisioned a world where individual stock returns would be so asymmetric that one group (Tech) would see share prices rise to hundreds of dollars while the rest of the market saw share prices remain around $50. So he made his index price-weighted…

Big mistake, that, because since Google and Amazon trade for $1,168 - $1,735 they will never see the inside of the Dow. Remember that the Dow’s largest weighting is Boeing, with a $340 share price and a 9.8% weighting. Google and/or Amazon would swamp the Average.

Moreover, with the rise of indexing, companies have less pressure to split their stocks so that’s probably not going to happen with Google or Amazon. Not only is single-stock investing less popular, but also exchange traded/passive funds actually like high priced stocks since US trading commissions are paid per share. Fewer shares for the same trade size equates to lower costs.

Of course the other reason the Dow was in the news today was its 13th trip to the unchanged line on the year.

That’s notably worse than the S&P 500, which is still up 3.3% on the year. We pulled the data on what stocks have represented this tug of war in 2018. Here’s the data:

  • 3M (down 15.3% YTD) is responsible for the biggest hit to the Dow in 2018, at 224 points. This is 28% of the Average’s underperformance versus the S&P 500. Worth noting: 3M is one of the most international companies in the Dow, with just 39% of revenues coming from domestic sources.
  • The next 3 losers for the year represent 389 points of headwind, or 49% of the Dow’s slippage to the S&P 500. They are Goldman Sachs (down 10.4% YTD, 174 points), Johnson & Johnson (down 12.3%, 112 points) and Caterpillar (down 9.1% YTD, 103 points).
  • The remaining quarter (23% really) of the Dow’s underperformance to the S&P comes from Proctor & Gamble (down 16.9%, 98 points) and Walmart (down 15.3%, 97 points).

So what does this Dow math lesson tell us about equity market sentiment as we come up on the half-year mark? Three observations:

#1. Home is where the heart and stock market returns are. We mentioned that 3M generates just 39% of its revenues from the US. The numbers for: JNJ (48% non-US revenues), CAT (54% non US), and PG (55% non-US sales). As for Walmart, although its revenues are still 73% US-based, much of what it sells is obviously made elsewhere.

In fact, you can draw a YTD stock price performance line from the zero-return Dow’s heavy non-US exposure to the S&P 500 (39% non-US) at +3.3% to the much more domestic Russell 2000, up 10.3%.

#2. Trade war concerns are one explanation, and certainly a good one for the Dow’s flat-line in 2018 but the S&P 500’s performance needs a few words of explanation. The Tech sector here has both the highest international revenue exposure (58%) in the index and the best performance (+11.7%). Why?

By virtue of China’s home grown tech giants (Tencent, Alibaba, Baidu) and the US’s own leaders (AAPL, GOOG, FB, etc), there is little overlap between the two countries and that’s proving to be a powerful positive for US large cap Tech stocks. Yes, Apple has China exposure but Facebook and Google are both banned. And, of course, Apple’s largest manufacturing partner is China, which helps.

#3. There seems little doubt that the trade-war-of-words between the US and China will only get worse but we take some comfort in Charles Dow’s quote. Things will change, and eventually for the better. But for now, big cap Tech is (and will remain) a popular parking lot for equity capital.

Published:6/21/2018 11:20:08 AM
[Entertainment] Ozark Season 2 Premiere Date, Trailer Revealed: "What Is the Endgame?" OzarkIt's time to go back to the Ozarks. The show that paired Laura Linney and Jason Bateman in many, many dark scenes--as in visually dark--is almost back. Yes, Ozark, the Netflix series so many...
Published:6/21/2018 10:48:15 AM
[Entertainment] Cardi B Wants Her Baby Shower to Be "Lit" Cardi B, Offset, Rolling Stone, July 2018Don't expect casual afternoon hors d'oeuvres at Cardi B's baby shower, because it's going to be way more "lit" than that. The 25-year-old rapper is expecting her...
Published:6/21/2018 10:18:32 AM
[Entertainment] Daria Reboot in the Works, But Not Necessarily on MTV DariaDaria! Aeon Flux! The Real World! Made! All your favorite MTV show could be making a comeback...just not on MTV. According to The Hollywood Reporter, MTV has launched MTV Studios, the...
Published:6/21/2018 9:48:12 AM
[Markets] Benjamin Netanyahu's Wife Indicted On Fraud In "Prepared Food Affair"

With Israeli Prime Minister Benjamin Netanyahu already under close legal scrutiny for his role in the Bezeq-Walla Affair, on Thursday his wife was also indicted on Thursday over allegations that she misused state funds.

Sara Netanyahu stands accused of ordering hundreds of meals using government funds to the prime minister's residence totaling over $100,000. At the same time she deceptively claimed the residence had no cook, even though there was a cook employed on the state's dime, presumably in order to keep the expensive outside ordered meals coming and to avoid exposure. 

Sara and PM Netanyahu. Image source: AP

What's now being called the "Prepared Food Affair" exploded in Israeli media the moment Attorney-General Avichai Mandelblit issued the indictment. Though reporters first learned of the impending charges two weeks ago, all attempts at plea bargaining failed and resulted in the formal charges. 

Sara Netanyahu's lawyers reportedly exhausted every avenue to avoid her being slapped with a criminal record, even offering for her to give public apology while returning some of the fraudulently obtained funds, according to the Jerusalem Post.

The indictment has added immense pressure and further scrutiny upon the legally embattled prime minister, who could face an indictment related to bribery charges in the Bezeq-Walla case sometime within the next year. Though PM Netanyahu is not expected to resign over his wife's fraud case, a similar scandal in the 1970's involving Leah Rabin, wife of then-prime minister Yitzhak Rabin, forced Rabin's resignation from office during his first term (1974–77). 

Notably, a key witnesses in the prime minister's bribery scandal, a former close adviser to the Netanyahu family named Nir Hefetz, is also a key witness against Sara.

The Jerusalem Post summarizes the details of the indictment as follows:

In the Prepared Food Affair, the prosecution alleges that from September 2010 until March 2013, Sara Netanyahu acted in coordination with then-Prime Minister’s Office deputy director-general Ezra Seidoff falsely claiming that the Prime Minister’s Residence did not employ a cook, even though it did during that time.

According to the allegations, the two made the false claim to circumvent and exploit regulations that stated, “in a case where a cook is not employed in the official residence, it is permitted to order prepared food as needed.” The two hoped to obtain state funding both for the cook at the residence and for prepared food orders. In this way, the two allegedly fraudulently obtained from the state NIS 359,000 in hundreds of prepared food orders.

More than merely ordering expensive food, paperwork was deliberately falsified to line the pockets of residence staff with state funds:

Furthermore, in 15 instances, invoices to chefs who were brought in from outside were falsified in order to circumvent limits on how much could be paid toward outside-chefs. Seidoff directed the chefs, the house managers and Netanyahus' secretaries to falsify the invoices in these 15 instances.

Netanyahu's defense has been to claim she was not directly involved to the point of being unaware of the forged paperwork and food orders, blaming the Prime Minister's Residence managers. The charges stem from food orders and invoices going all the way back to 2010, soon after PM Netanyahu first assumed office. 

One residence manager at the heart of the affair, Meni Naftali, has already admitted to criminal wrongdoing in the episode. The defense will try to build a case that it was Naftali and other staff that mishandled the orders and falsified paperwork of their own volition and not under supervision of Netanyahu. 

Published:6/21/2018 9:18:33 AM
[Entertainment] Victoria Beckham Calls David Beckham an "Incredible Husband" Following Divorce Rumors David Beckham, Victoria BeckhamLife is one big juggling act for Victoria Beckham. Taking the stage at Forbes Women's Summit on Tuesday, the former Spice Girl-turned-fashion mogul got to the age-old topic of how...
Published:6/21/2018 8:48:19 AM
[Politics] Daily Presidential Tracking Poll

The Rasmussen Reports daily Presidential Tracking Poll for Thursday shows that 46% of Likely U.S. Voters approve of President Trump’s job performance. Fifty-two percent (52%) disapprove. 

The latest figures include 33% who Strongly Approve of the way the president is performing and 43% who Strongly Disapprove. This gives him a Presidential Approval Index rating of -10. (see trends).

Regular updates are posted Monday through Friday at 9:30 a.m. Eastern (sign up for free daily email update).

Now that Gallup has quit the field, Rasmussen Reports is the only nationally recognized public opinion firm that still tracks President Trump's job approval ratings on a daily basis. If your organization is interested in a weekly or longer sponsorship of Rasmussen Reports' Daily Presidential Tracking Poll,  please send e-mail to  beth@rasmussenreports.com  .

Special Midterm Election Offer:   Between June 11 and 24, 2018, you can get 6 months of Rasmussen Reader service for 60% off  of the regular monthly price – just $12.00 . Sign up today !

Published:6/21/2018 8:48:19 AM
[Markets] Trump's "Space Force" Is No Joke - Bloomberg Admits "It Might Even Work"

Via The Bloomberg Editors,

The military is heavily reliant on space, but its approach now is dysfunctional.

President Donald Trump’s desire to add a “Space Force” to the U.S. military has elicited plenty of mockery and puzzlement. But don’t dismiss the idea. If undertaken prudently, it could represent a substantial and forward-looking reform.

Although Trump offered few details, Congress has been mulling a similar concept for years. The idea would be to create a new military branch, or a new service within the Air Force, dedicated to overseeing operations in space. Trump said this week (in unfortunate language) that he envisions the new entity as “separate but equal” to the Air Force.

If nothing else, such a shift would recognize military reality. Space is an increasingly critical battlefield. Across its five branches, the U.S. military uses space-based technology for navigation, reconnaissance, weather forecasting, intelligence collection, communications, command and control, precision targeting, and much else. Its reliance on satellite-guided munitions has increased with each new conflict in recent years.

This growing dependency also creates risks, however. Satellites are vulnerable to attack, as are the ground systems that support them. By treaty and convention, countries have long avoided conducting strikes in space, but U.S. adversaries have been investing heavily in anti-satellite weapons for years, and with good reason — without adequate defenses, space could become an “Achilles’ heel” for America’s high-tech forces.

Yet no one is fully in charge of U.S. space operations. Notionally, most responsibility falls to the Air Force. But in practice, authorities are fragmented across some 60 different entities. Among other problems, this has made acquiring new technology a painfully slow and expensive process, which results in the U.S. chronically sending obsolete stuff into orbit. It has made it harder to set coherent priorities and pursue a broader strategy for space. And plenty of critics have argued — persuasively — that the current arrangement is impeding much-needed change and innovation.

Could Trump’s Space Force, or something like it, do better?

Several studies, dating back to 2001, suggest that it could. If organized with care and forethought, such a force could clarify accountability, accelerate decision-making, rationalize the procurement process, improve recruitment, and ease pressure on the broader Air Force, which is heavily burdened with more traditional responsibilities.

Done rashly, though, such a reform could simply enlarge the bureaucracy and create catalogs of new expenses. More alarmingly, it could signal to other countries that the U.S. is taking a more belligerent approach to space, and thus encourage a new arms race or otherwise worsen tensions. For these reasons and others, much of the Pentagon’s senior leadership — not least, the president’s own defense secretary — opposes the idea.

Some skepticism, then, is clearly in order. Creating a Space Force would be the most ambitious reorganization of the military since 1947. And getting it right would require extreme diligence, farsightedness and attention to detail — virtues that are not exactly hallmarks of this administration.

Even so, the idea is worthy of serious debate. Congress, which would have to authorize and fund any new military branch, is considering it with due care. The president has drawn needed attention to long-simmering flaws in U.S. space policy. And the Pentagon now has renewed incentive for reform. All that should count as progress — whether the Space Force takes off or not.

Published:6/21/2018 8:48:18 AM
[Entertainment] Nikki Bella Argues With Brie About Who Should Walk Her Down the Wedding Aisle: "I Just Feel So Confused" Nikki Bella, Total Bellas 306Nikki Bella is "so confused" when it comes to planning her wedding. Although Nikki's engagement to John Cena is back on, it seems she can't escape the drama in this clip...
Published:6/21/2018 8:17:29 AM
[Politics] Regular Cell Phone Users Downplay Cancer Connection

Americans aren't overly concerned that cell phone usage may lead to cancer.

A new Rasmussen Reports national telephone and online survey finds that just 19% of American Adults say they rarely or never use a cell phone to make calls, send text messages and e-mails or use the internet. Fifty-eight percent (58%) use their cell phones at least several times a day, with nine percent (9%) who use it every hour and 10% who use their phone constantly. Another 22% say they use their cell phone only once or twice a day. (To see survey question wording, click here.)

Special Midterm Election Offer: Between June 11 and 24, 2018, you can get 6 months of Rasmussen Reader service for 60% off  of the regular monthly price – just $12.00 . Sign up today !

(Want a free daily e-mail update? If it's in the news, it's in our polls). Rasmussen Reports updates are also available on Twitter or Facebook.

The survey of 1,000 American Adults was conducted on June 17-18, 2018 by Rasmussen Reports. The margin of sampling error is +/- 3 percentage points with a 95% level of confidence. Field work for all Rasmussen Reports surveys is conducted by Pulse Opinion Research, LLC. See methodology

Published:6/21/2018 7:47:29 AM
[Entertainment] Kick Off Summer With Bikini Inspiration From Your Favorite Celebs Like Rita Ora, Nina Dobrev and More! Rita Ora, Vacation, Bikini, Bathing SuitSummer is finally here--well, it's now officially here--which means it's bikini season! In honor of the first day of summer (which is today, June 21) we've rounded up our...
Published:6/21/2018 7:18:57 AM
[Markets] California Cops Reject Bill That Would Limit Use Of Lethal Force

California law enforcement organizations are in staunch opposition to a new bill which would restrict the circumstances under which police officers can use deadly force in the line of duty, reports Alexei Koseff of the Sacramento Bee.

Assembly Bill 931 would increase the state mandated standard for the use of lethal force from "reasonable" to "necessary" in order to become law. While the bill passed through its first policy committee on Tuesday, it faces an uphill battle in a state legislature that typically doesn't cross law enforcement

"We agree that more training can result in better outcomes, but there is a fundamental disagreement about raising the standard above what the Supreme Court has said," Jonathan Feldman, a lobbyist for the California Police Chiefs Association, told The Bee. -Sacramento Bee

Two cases heard by the U.S. Supreme Court in the 1980s set a legal precedent that police officers can kill suspects if a "reasonable" officer in a similar situation would have done the same. AB 931 - introduced this spring following the South Sacramento shooting death of Stephon Clark - would restrict police to using deadly force only in situations where they have no available alternatives to protect themselves or others

Clark, 22, was shot 20 times while holding his cell phone on March 18, sparking a public outrage.

Retraining over 100,000 California police under the new standards has been raised as a concern by the Peace Officers Research Association of California (PORAC) - an argument which CA Senator Holly Mitchell of Los Angeles pushed back against. 

"Is it a mere matter of cost? And from your perspective, what would constitute or justify retraining of police officers?" she asked.

"The training is huge. It's going to be a difficult task to train that many people that fast, and there's no money in the bill to do that," Aaron Read, a PORAC lobbyist, who noted that law enforcement organizations had supported legislation several years ago to add training on how to handle suspects with mental health issues.

Mitchell questioned whether finding enough money was the real issue, because - she said when "law enforcement makes it a priority, we find a way."

"I've sat on public safety committees since I was elected, and I can count on one hand the number of times law enforcement has come to the table to truly collaboratively address issues," said Mitchell. "Perhaps mental health is politically an easier pill to swallow than race-based bias."

Democratic lawmakers moved AB 931 out of the public safety with an initial vote of 5-1 in front of supporters carrying pictures of friends and family who have been killed by police, many of whom say police shootings are racially motivated.

"It always blows me away when law enforcement fear for their life only when they're facing black and brown people," Sen. Steve Bradford, D-Gardena, said. "It blows me away me when black and brown men and women don't even get to the jail. They don't even get a chance to be arrested."

The American Civil Liberties Union of California is also behind AB 931, with the organization's legislative advocate Lizzie Buchen noting that California police use deadly force at a higher rate than other states - with five CA police departments in particular leading the statistic; Bakersfield, Stockton, Long Beach, Santa Ana and San Bernardino - all of which are in the top fifteen in the country for killings per capita. 

"Accountability is a really important part of changing the culture," Buchen said. "What steps could you have taken instead of what you did?

"It doesn't mean they've tried all the other things, because we recognize that there are some situations where they're not going to be able to," she added.

PORAC has flatly rejected the bill, suggesting that AB 931 is "reactionary legislation" that will "handcuff peace officers and their abilities to keep communities safe." 

Assembly Bill 931 deceptively pretends that creating a checklist of what constitutes necessary force instead of reasonable force is something more than irresponsible legislation. The end result is that the public will be placed at greater risk. 

...

Uses of force incidents occur quickly, and while we have always supported greater training and body cameras, this legislation takes a dangerous new step. The legislation will require officers in every rapidly advancing, extraordinarily dangerous situation to employ a checklist that ultimately places everyone at risk. -PORAC

The bill was written in a "political vacuum" says the organization. 

In a June 3 op-ed in the San Francisco Examiner, Arif Alikhan and Seth Stoughton note, among other things: 

AB 931 would provide some much-needed amendments to existing law, but it would also create new problems and exacerbate some old ones. Although we believe the bill was proposed with the best of intentions, it may, counterintuitively, actually lead to more officer-involved shootings.

...

As much as we might wish it were not the case, officers will occasionally have to use deadly force in response to a deadly threat. The proposed statute properly limits justifiable homicides to those situations in which officers use deadly force to “prevent imminent and serious bodily injury or death to the officer or to a third party.” It also properly prohibits officers from using deadly force against individuals who present a threat only to themselves. -San Francisco Examiner

Read the bill below:

Published:6/21/2018 7:18:57 AM
[Markets] China Quietly Approaches US To De-escalate Trade War

As fears about an escalating trade war have continued to hammer stocks on Thursday, now that Daimler has become the first company to slash guidance blaming protectionism as the cause (who knows what the real cause is), Market News International (MNI) reported that Chinese trade officials have "quietly" approached the US to find a way to minimize punitive tariffs on Chinese goods.

The news comes after China again reiterated that it would retaliate if President Trump slaps 10% tariffs on some $200 billion in Chinese goods, something he threatened to do earlier this week. In its latest communique, China said it is "fully prepared" to respond to any new list of US tariffs, according to a spokesman for the Commerce Industry, who added that China will use "a combination of quantitative and qualitative measures" to strike back at the US. Meanwhile, India followed in the European Union's footsteps by raising tariffs on a slew of items, including walnuts, almonds, boric acid, apples, diagnostic reagents and some hot-rolled coil products.

India also joined the global trade war, and in retaliation to US tariffs, increased its own tariffs to 70% on chickpeas and Bengal gram, according to Bloomberg.

"The increase in tariffs is a message to the U.S. administration to take concerns of other nations seriously," said Sachin Chaturvedi, director general at New Delhi-based think tank Research and Information System for Developing Countries. "Now this is unlikely to remain confined to a tariff war and will escalate to non-tariff measures as well."

Just like their Chinese peers, Indian officials accused the Trump administration's steel and aluminum import duties of being a violation of global trade rules. India, which the Treasury placed on a currency manipulation watchlist earlier this year, saw its trade surplus with the US shrink to $28 billion in 2017, marginally lower than the $30.8 billion from 2016.

China

As Bloomberg points out, higher import duties by the US could hurt the Indian export market, as well as economic growth more broadly at a time when foreign investors are pulling their money from emerging markets.

"The U.S. is being a bully right now and the only way out is to come to the negotiating table," said Biswajit Dhar, a professor at the New Delhi-based Jawaharlal Nehru University. "Responses of partner nations are adequate enough to force the U.S. to do that."

Earlier this week, the EU triggered the first phase of retaliation against the US over its metals-import tariffs by raising levies on key US products. Canada's retaliatory measures will begin in July, and Mexico and other nations have also announced that they would respond. But China and Europe are planning to send a message about protectionism during a "high-profile dialogue" to be held June 25.

"The US abuses tariffs to trigger trade wars everywhere around the globe and that will severely damage the world trade order, hurt the interests of trading partners, and also hurt its domestic companies and people," Ministry of Commerce spokesman Gao Feng said at a regular briefing in Beijing on Thursday. The US "always uses other nations as scapegoats for their own problems" he said.

Those remarks come after the White House late Tuesday published a scathing report accusing China of "economic aggression" and detailing China's strategies for acquiring US intellectual property and violating US export laws. Both China and the US have promised to impose tariffs on billions of dollars in goods next month. While the two sides had initially held "positive, constructive" negotiations, it's unclear whether the two sides are still even talking.

Published:6/21/2018 6:47:03 AM
[Entertainment] How Kevin Hart Came Out on Top After His Scandalous Year Kevin HartIt hasn't been the easiest year for Kevin Hart. Just 10 months ago, the 38-year-old comedian found himself at the center of a scandal. In May, Jonathan Todd Jackson, also...
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[Entertainment] Vote For Who You Think Should Win 2018 BET Awards' Best Female R&B/Pop Artist Beyonce, On The Run II TourCan you hear that? It's the BET Awards and they're coming in hot! This weekend (June 24) marks the annual BET Awards and there are a lot of great categories that we have no idea...
Published:6/21/2018 5:47:35 AM
[Entertainment] Baywatch Posters, $178 Cocktails and Nights at the Club: A Look Back at Prince William's Bachelor Days Prince WilliamIn the lead up to Prince Harry's vows, his older brother Prince William made the type of off-hand teasing comment that makes you wonder. Having been officially named the best man for...
Published:6/21/2018 5:17:07 AM
[Markets] Michael Bloomberg Spending $80 Million To Flip House To Democrats

With the Democratic Party in shambles and the DNC somehow always broke and demanding refunds from Hillary Clinton, Michael Bloomberg plans to peel off $80 million of his estimated $52 billion fortune to help Democrats retake the House of Representatives in the upcoming midterm elections, reports the New York Timesciting Bloomberg's advisers.

The former New York City mayor will focus on a dozen or so congressional districts, primarily in moderate suburban areas where Donald Trump is less popular in order to help Democrats gain the 23 congressional seats needed to win a majority. 

Bloomberg,76, a political chameleon who turned Independent in 2007 while still running for Mayor on the Republican ticket, has been a champion of various liberal policies such as gun control, immigration and the environment. 

He also tried to control the size of a soda New Yorkers could consume under the "Soda Ban" on sugary drinks in cups over 16 ounces - which was overturned by the New York Court of Appeals in 2014. Bloomberg spent millions to enact similar legislation in Chicago - except it was a tax and not a ban, only to have it repealed by city officials. 

By siding so emphatically with one party, Mr. Bloomberg has the potential to upend the financial dynamics of the midterm campaign, which have appeared to favor Republicans up to this point. Facing intense opposition to President Trump and conservative policies, Republicans have been counting on a strong economy and heavily funded outside groups to give them a political advantage in key races, especially in affluent suburbs where it is expensive to run television ads. -New York Times

The Times reports that Bloomberg hasn't chosen a specific list of races yet, however he is obviously not likely to target rural, conservative-leaning districts where his anti-2nd-Amendment history and other issues would likely turn voters off

Bloomberg's support will most likely make New York politics the centerpiece of the 2018 midterms, given the high profile politicians involved. 

[Bloomberg's involvement] promises to put New York and its political leaders even more squarely at the center of a midterm campaign already stocked with prominent characters from the city, including a president who made his fortune in Manhattan real estate; the top Democrat in the Senate, Chuck Schumer; and Mr. Bloomberg’s predecessor in Gracie Mansion, Rudolph W. Giuliani, who serves as a lawyer for Mr. Trump. -New York Times

The former NYC mayor is on track to exceed that of Republican donor Sheldon Adelson - a Republican Casino mogul who recently donated $30 million to a super-PAC aligned with House Speaker Paul Ryan. 

Bloomberg issued a statement Wednesday outlining his intentions, and letting us know he's not partisan (just pro-establishment, and very against guns like the ones his armed security detail carries): 

***

Statement of Mike Bloomberg on the 2018 Midterm Elections (emphasis ours)

I’ve never much liked political parties. I’ve always believed that we should put country before party. Too many politicians practice the reverse, with terrible consequences for the American people.

But although I don’t believe in partisanship, I very much believe in the importance of politics and elections. That’s how we make change and progress in a democracy.

Over the years, I have supported candidates in both parties who were willing to break with partisanship and the special interests and seek common ground around solutions to make America better. I’ve focused my philanthropy partly around bipartisan gun safety, environmental and immigration reform measures, and my political giving has been focused around those priorities as well.

In the last election, for example, I spent nearly ten million dollars to help a Republican, Pat Toomey, get re-elected in Pennsylvania. I disagree with him on many issues. But after the Newtown, Connecticut shooting, he broke with the NRA and co-wrote a bipartisan bill to close the background check loophole.

At the same time, I spent roughly the same amount to help successfully elect a Democrat in New Hampshire – Maggie Hassan – who was running to defeat a Republican incumbent who had voted against Toomey’s bill.

This year, I'm supporting both Republican and Democratic gubernatorial candidates who have shown strong leadership on gun safety, the environment, education, and other critical issues facing the country.

It’s unusual to support candidates of both parties in a robust way, but that approach has reflected my belief that democracy and government work best when people from both parties work together. There are good people in both parties, and neither has a monopoly on good ideas.

I've never thought that the public is well-served when one party is entirely out of power, and I think the past year and half has been evidence of that.

Republicans, who control both houses of Congress, have done little to reach across the aisle to craft bipartisan solutions – not only on guns and climate change, but also on jobs, immigration, health care, and infrastructure. As a result, Congress has accomplished very little.

In addition, and no less troubling, Congress has essentially stopped acting as a co-equal branch of government, by failing to engage in the kind of oversight of the law that the Constitution requires and the public expects.

In fairness, some Republicans have taken their constitutional and legislative responsibilities seriously, like my friend John McCain. But too many have been absolutely feckless, including – most disappointingly – the House leadership.

Republicans in Congress have had almost two years to prove they could govern responsibly. They failed. As we approach the 2018 midterms, it's critical that we elect people who will lead in ways that this Congress won’t – both by seeking to legislate in a bipartisan way, and by upholding the checks and balances that the Founding Fathers set up to safeguard ethics, prevent the abuse of power, and preserve the rule of law.

And so this fall, I'm going to support Democrats in their efforts to win control of the House.

To be clear: I have plenty of disagreements with some Democrats, especially those who seek to make this election about impeachment. Nothing could be more irresponsible. But I believe that ‘We the People’ cannot afford to elect another Congress that lacks the courage to reach across the aisle and the independence to assert its constitutional authority. And so I will support Democratic candidates who are committed to doing both.

Published:6/21/2018 5:17:07 AM
[Markets] Do You Have A Cryptocurrency Addiction? This British Hospital Has A Treatment Just For You

Authored by Simon Black via SovereignMan.com,

By the time Louis XIV passed away in 1715, seven decades of his absurd extravagance had nearly bankrupted France.

His reign was marked by constant warfare and the most excessive spending imaginable, from opulent palaces (including Versailles) to a costly welfare state– public hospitals, parks, monuments, museums.

Louis XIV had turned France into the world’s leading power. But it came at a heavy cost.

The national debt was nearly as large as the entire French economy itself, and the government’s annual budget deficit was appalling.

France was bleeding cash. And so in 1719, the government tried a new idea to shore up its finances.

First, they issued a formal decree granting a full monopoly over nearly all of France’s international commerce and trade to a company called Compagnie du Mississippi, i.e. the Mississippi Company.

The government gave full control of the deal to a Scottish banker named John Law; Law was to sell shares of the Mississippi company to the public, and funnel the proceeds to the government.

The initial share sale was a phenomenal success. Law promised investors that the Mississippi Company would pay an annual dividend equivalent to about 120% of the share price.

It was an extraordinary prospective return. And investors literally lined up outside of Law’s house to apply for shares.

Almost immediately a bustling secondary market for the shares emerged, and countless people of every age, gender, and social status spent their days buying and selling stock in the Mississippi Company.

The investor hysteria was so extreme that the share price of the Mississippi Company would sometimes rise 20% in the course of a few hours.

A quaint plaza near John Law’s home became the unofficial stock exchange for Mississippi Company shares, and there are legendary stories of the investor frenzy there.

In his 1841 book Extraordinary Popular Delusions and the Madness of Crowds, Charles Mackay wrote about a local cobbler who was able to rent out his stall in the plaza for an extraordinary sum of money, and about a hunchback who earned a great living charging speculators to use his hump as a writing surface to sign contracts.

EVERYONE was making money. It was commonplace that illiterate farm laborers would turn their meager savings into substantial fortunes, practically overnight.

Of course, hardly anyone knew what they were buying– whether there was an actual business plan, whether management was competent, or whether the deal could generate any profit.

Those seemed to be irrelevant details. The only two things that mattered were the fact that the share price was going up, and that the New World had enormous potential.

So the speculation persisted.

At the end of 1720, the bubble finally burst, not even two years from the time that it started.

A few people made money– those who got in early and weren’t stupidly greedy. But most people lost everything. And John Law fled to Belgium.

Now, it’s difficult to read about the Mississippi Company Bubble and not think about the modern roller coaster ride of cryptocurrency.

Please don’t misunderstand– I’m not anti-crypto.

I was an early adopter of Bitcoin and have made a number of investments in promising crypto startups.

But even the most die-hard crypto fanatic should acknowledge the irrational frenzy in late 2017 that saw cryptocurrency prices soar to new heights on an almost daily basis.

And just like the Mississippi Bubble, it was fed by countless speculators feverishly throwing their money at an asset based on the facts that crypto has enormous potential, and it was going up in price.

Apparently, crypto fever got so bad that a hospital in the UK set up a program for Cryptocurrency Addicts.

The Castle Craig Hospital website has a self-assessment tool with a number of questions, for example–

  • Am I spending large amounts on cryptocurrency?

  • Do I spend a lot of time thinking about different types of cryptocurrency?

  • Have I ever fibbed to other people about how much time or money I spend trading in cryptocurrency?

  • Do I become restless or irritable if I try to cut down my screen time related to cryptocurrency?

  • Do I carry on trading in cryptocurrency after losing money – to try to gain it back?

And more.

The fact that this treatment program even exists is a testament to the sheer volume of fanatics who are consumed with the prospect of getting rich quick on the next cryptoflavor du jour.

When there’s that many people who believe they can become extraordinarily wealthy in a short amount of time by merely acquiring an asset that’s a tiny representation of a future trend, you can rest assured that most of the easy money has already been made.

And that’s really the point: we’re no longer in the earliest, most nascent stages of the crypto game.

You hear about Bitcoin now on the nightly news. It’s mainstream.

So the idea that there’s still a high likelihood of making a 10,000x return on some random coin or token at this stage in the game is just plain naive, especially when the investment thesis is simply “crypto is the future.”

Yes, the broader concepts of crypto and distributed ledger technology are the future, just as the New World represented tremendous opportunity back in 18th century France.

But just like the Mississippi Bubble, that larger trend doesn’t automatically mean that F*ckToken and T!tCoin are worthwhile investments.

Now, I’m not saying that you can’t make money in crypto anymore. Far from it.

As we talked about last week, there are still unimaginable fortunes to be made from this trend.

But at this point, those new fortunes are awaiting investors and entrepreneurs who are at the forefront of developing the technology and applying it to the countless, game-changing possibilities in public and private industry.

And to continue learning how to ensure you thrive no matter what happens next in the world, I encourage you to download our free Perfect Plan B Guide.

Published:6/21/2018 4:17:18 AM
[Markets] Bannon, Salvini, And A Powerful Catholic Cardinal Are Gunning For Pope Francis

?As a wave of populism continues to rise throughout Europe - most recently Italy where refugees are now being turned away - conservative Catholics are coming together to take on Pope Francis. 

At the center of the intra-faith movement are Steve Bannon, Italy's new interior minister Matteo Salvini, and American Cardinal Raymond Burke - all of whom are staunchly opposed to liberal open-border policies advocated by Pope Francis. 

Francis is a harsh critic of secure borders, and an advocate of unchecked migration - calling President Trump "un-Christian" for wanting to build his wall (which would be around 30-feet, the same height as the wall surrounding the Vatican). 

It is no secret that Francis, whose first ever apostolic voyage was to the Italian island of Lampedusa to give support to the hundreds of thousands of migrants who have crashed onto the shores there, supports an open-border policy. He has celebrated mass on the Mexican border with the United States, and he has warned world leaders to prioritize the acceptance of migrants over national security concerns and to avoid “discrimination, racism, extreme nationalism and xenophobia.” -Daily Beast

Burke, Bannon and Salvini have railed against Francis, with Bannon calling the Catholic Church "one of the worst instigators of this open borders policy," adding that "The Pope - more than anybody else - has driven the migrant crisis in Europe." 

The three conservative Catholics came together earlier this month when Bannon was in Rome to celebrate Italy's new populist coalition government run by Salvini, along with Five Star Movement leader Luigi Di Maio and Prime Minister Giuseppe Conte. During his visit, Bannon took a side-trip to the 800-year-old Trisulti monastery under development by conservative UK catholic Benjamin Harnwell. 

Harnwell runs a conservative Catholic organization, the Dignitatis Humanae Institute - which was "founded to help Christian politicians defend their faith in the public square." 

The monastery will host events with speakers like Bannon and Burke and conservative Christian leaders. 

...

Harnwell and his organization are an important connection between Bannon and Burke. Harnwell is the one who first introduced the two, according to a New York Times article that is displayed on Harnwell’s website. Bannon spoke at one of Harnwell’s’ conferences by grainy video link back in 2014 during which he warned that the migration exodus would lead to a rise in populism. Burke was the keynote speaker the year before. -Daily Beast

Burke, meanwhile, is one of the pope's harshest critics - openly challenging Francis' ability to lead the church while campaigning for limitations on papal powers. Burke has openly called Islam a threat, and is an open supporter of President Trump. 

Burke has been getting closer to Salvini, who visited him this week in Rome. It was not their first meeting. Salvini, meanwhile, closed Italian ports to NGO rescue ships this month - forcing several ships full of asylum seekers to divert to Spain and France.

Salvini also told an Italian television station Monday that he plans to conduct a census of the Roma community, and will kick anyone out of the country residing there illegally.

“Irregular foreigners will be deported via agreements with other countries ... But Italian Roma unfortunately we have to keep.”

So it should come as no surprise that Bannon is a giant fan of Salvini - calling his policies an example for the rest of the world

Salvini, meanwhile, is enjoying a boost in popularity within Italy, reinforced with a photo op with Cardinal Burke.

Francis, pushing back against the mounting Catholic coalition against his open-border policies, has been particularly vocal of late on the issue of migrants - both in regards to Italy's closed ports and the US-Mexico border controversy over migrant children being separated from their families (meanwhile 80% of migrant children are unaccompanied - meaning their parents chose to separate from them when they shoved them across the border with a human trafficker). 

I would like to point out that the issue of migration is not simply one of numbers, but of persons, each with his or her own history, culture, feelings and aspirations,” Francis said this week. “These persons, our brothers and sisters, need ongoing protection, independently of whatever migrant status they may have.”

We look forward to demolition crews tearing down the "un-Christian" Vatican walls so that all those persons who need ongoing protection can seek shelter in the ever-loving and charitable arms of the Catholic church. Especially the children. 

Published:6/21/2018 3:16:15 AM
[Markets] Switzerland Rejects Sovereign Money, Welcomes Radicalization

Just weeks after  rejecting the idea of taking back control of their own sovereign money, the Swiss have just rejected a proposed law preventing mosques from accepting money from abroad, and compelling them to declare where their financial backing comes from and for what purpose the money will be used. According to the proposal, imams also would have been obliged to preach in one of the Swiss national languages.

Authored by Judith Bergman via The Gatestone Institute,

While the proposal narrowly passed in the lower house of parliament already in September 2017, the upper house recently rejected it. The proposal was modeled on regulations in Austria, where already in 2015, a law banning foreign funding of religious groups was passed. The Austrian law aims to counter extremism by requiring imams to speak German, prohibiting foreign funding for mosques, imams and Muslim organizations in Austria, and stressing the precedence of Austrian law over Islamic sharia law for Muslims living in the country.

The Federal Council, which constitutes the federal government of Switzerland, was also against the proposal, and claimed that it constituted 'discrimination': "We must not discriminate against Muslim communities and imams and put them under general suspicion," Justice Minister Simonetta Sommaruga said. The Federal Council noted that in Austria, Islam is officially recognized, whereas it is not in Switzerland. According to the Swiss government, therefore, the model applied in Austria does not apply to Switzerland, as "One cannot demand obligations without rights". Instead, the Federal Council evidently believes that the risks posed by extremist Islamist preachers and communities can be combated within existing law.

There are approximately 250 mosques in Switzerland, but the authorities do not know who finances them. The authorities have no jurisdiction to collect data on the financing of Muslim associations and mosques apart from exceptional cases in which internal security is threatened. By rejecting the proposal compelling mosques to disclose who finances them, the Swiss authorities can now remain willfully blind.

Several experts have pointed out the foreign Muslim networks at work in Switzerland. In 2016, Reinhard Schulze, professor of Islamic Studies at the University of Bern, pointed out that donations from the Muslim World League, based in Saudi Arabia, and other funds from Saudi Arabia were flowing to "those mosques and organizations that are open to the Wahhabi tradition". Another expert on Islam in Switzerland, Saïda Keller-Messahli, has spoken and writtenwidely on how "Huge sums of money from Saudi Arabia, the United Arab Emirates, Qatar, Kuwait and Turkey are flowing to Switzerland", and how the Saudi-based Muslim World League is behind "a whole network of radically-oriented mosques in Switzerland... with the clear intention of spreading Salafist thought here".

In addition to the Salafist influence, there are an estimated 35 Turkish mosques, financed by Turkey's official Religious Affairs Directorate, known as Diyanet. (Previous reports have mentioned 70 Turkish mosques in Switzerland).

According to a report published by Diyanet in 2017, Islam is "superior" to Christianity and Judaism and "Interfaith dialogue is unacceptable". Turkey supports the Muslim Brotherhood and its terrorist off-shoot Hamas.

In fact, the building of another Turkish mosque was just given the go-ahead in the Swiss town Schaffhausen. The people behind it reportedly claim that the 1.5 million Swiss francs (approx. $1.5 million) will be collected locally, and not from Turkey, but the imams for the mosque will nevertheless be sent from Turkey.

None of these facts, however, appears to bother the Swiss government, which seems to want to continue the flow of foreign funding of mosques and Islamic centers into the country.

Above all, the Swiss government seems not to have considered the rights of Swiss non-Muslim citizens, who are the ones left to live with the consequences of the government's ill-thought-out policies.

One such consequence was recently on display in Swiss courts, as three board members of the Islamic Central Council of Switzerland (ISSC) were on trial for charges of having produced illegal propaganda for al-Qaeda and related organizations. One of them, Naim Cherni, was given a suspended prison sentence of 20 months for publishing an interview he conducted with Saudi cleric Abdullah al-Muhaysini in Syria in 2015, in which al-Muhaysini called on young Muslims in Europe to join the jihad. The two other board members, chairman Nicolas Blancho and Qaasim Illi, were acquitted.

In contrast to Switzerland, Austria recently announced plans to shut down seven mosques and expelling up to 60 imams belonging to the Turkish-Islamic Union for Cultural and Social Cooperation in Austria (ATIB), a Muslim group close to the Turkish government, on the grounds of receiving foreign funding.

The response from Turkish President Recep Tayyip Erdogan's spokesman was that the policy was part of an "Islamophobic, racist and discriminatory wave" in Austria.

The strong message that the Swiss government is sending to those Muslim states and organizations that are fueling radicalization in Switzerland by funding Salafist, Turkish and other radical mosques, is that they are welcome to continue doing so; the Swiss government has no intention of stopping them, let alone asking any unpleasant questions. It might as well put up a sign, saying, "Radicalization Welcome".

Published:6/21/2018 2:46:00 AM
[Markets] Russia Raises Retirement Age Above Life Expectancy For 40% Of Men

An estimated 40% of Russians may never live to retire, after Prime Minister Dmitry Medvedev announced that the age to receive a Russian state pension would be raised from 60 to 65 for men by 2028, and from age 55 to 63 by 2034 for women. The draft legislation was discussed in the Russian cabinet on Thursday. There is one problem: a substantial portion of the Russian population will never live that long.

Angry Russians are accusing the Kremlin of announcing the changes while the country is distracted hosting the World Cup. 

Expected to be officially adopted by next year, the new policy would mean the country’s retirement age for men would be only a year lower than the World Health Organisation’s estimated life expectancy for a Russian man of 66.

It estimated around 40 per cent of men and 20 per cent of women may not live long enough to claim their pensions under the new rules. -Independent.co.uk

The Russian Confederation of Labour (KTR) says that the average life expectancy for men is actually less than 65-years-old in over 60 regions in Russia.

“KTR does not support such decisions and declares its intention to launch a broad public campaign against their implementation,” the organization said in a statement

According to the Federal State Statistics Service, in 62 regions of the Russian Federation, the average life expectancy of men is less than 65 years, and in three subjects - less than 60 years.

In other words, if demographic trends continue in Russia as a whole, up to 65 years 40% of men and 20% of women will not live to see their retirement. The implementation of the proposal to raise the retirement age will mean that a significant portion of Russian citizens will not survive to retirement.

The Kremlin, however, disagrees - with Russia's Federal Statistics Service projecting men's life expectancy to reach 74-years-old by 2037, according to Bloomberg.

The unpopular announcement comes as Russia is gripped watching their national team's 5-0 victory over Saudi Arabia in the opening game of the World Cup. 

“Under the noise of the opening of the 2018 World Cup Medvedev announced at a government meeting: the retirement age in Russia should be raised to 65 years for men and up to 63 years for women,” wrote Twitter user Yoshkin Mole.

How about some exoskeletons?

Facing a similar situation with an aging workforce, Japan has taken to outfitting senior citizens with exoskeletons so they don't throw out their brittle backs lifting boxes and whatnot.

In some cases, the solution lies in technologies that help offset senior workers’ deficiencies, like the exoskeletons used by Obayashi at its construction site. The Fujisawa Aikoen nursing home about an hour outside Tokyo started leasing the “hybrid assistive limb,” or HAL, exoskeletons from maker Cyberdyne Inc. in June.

At an office-building construction site in the center of Japan’s capital, 67-year-old Kenichi Saito effortlessly stacks 44-pound boards with the ease of a man half his age.

His secret: a bendable exoskeleton hugging his waist and thighs, with sensors attached to his skin. The sensors detect when Mr. Saito’s muscles start to move and direct the machine to support his motion, cutting his load’s effective weight by 18 pounds. -WSJ (2015)

"In Hokkaido, 60-year-old potato-pickers use rubber “smart suits” making it easier to bend over. Baggage handlers at Tokyo’s Haneda airport employ similar assistance," reports the Journal.

No word on whether they come with Adidas stripes for the Russian market.

Published:6/21/2018 2:16:13 AM
[Markets] Italy Challenges The Western Order... And The EU Is Showing The Strains

Authored by Frank Sellers via TheDuran.com,

With a massive influx of immigrants from across Africa and the Middle East, and growing poverty, Italy voted in a populist government representing policies which would seem to virtually overturn the postwar European order.

The austerity measures which have been imposed upon the Italian people have pushed more and more of them down into poverty, with the poverty rate doubling over the course of the past decade.

Relative to migration, Italy is one of the Southern European countries taking the brunt of the migrants who are flooding into Europe by the thousands, helped along by various NGOs which seek to alter the demographic makeup and economic and political order of Europe under the guise of humanitarianism.

The present economic metrics tend to perceive the profits of multinational corporations as a gauge of the health of the economy, rather than the economic situation on the ground level, faced by the Italian citizen. All of these and more are things which this new government has a view towards radically changing.

To combat Austerity, which may be tossed out the window, the option on the table is to review treaties to which Italy is partied which impose or advise them. Rather than gutting the population for the money which the government needs in order to cover obligations to multinational financial interests, a proposal was broached of launching a universal basic income, reduction in the pension age, as well as a flat tax system.

And while the migrant policy is still evolving, it has had a view towards repatriating the migrants which are already within Italy’s borders. Italy has already flexed its will on the migrants issue over refusing a ship full of migrants port in Italy, forcing it to set sail for Spain.

Foreign policy aims at softening the approach towards Russia by eliminating sanctions and by putting the focus on improving relations, benefitting Italy both by allowing a resumption of trade, and the perspective of Russia’s will and capacity to help get a handle on the situation in the Middle East, which is part of what prompts the migration issue, due to the region’s instability.

What this could mean is that an already strained relationship between Italy and the EU could be put to the test, or altered in a significant manner if these proposals are put into play after the fashion in which they were introduced during the elections cycle.

Alessandra Bocchi over at First Things observes:

Italy’s new government represents the most radical challenge yet to the order that has dominated Europe since World War II. Comprising the populist-left Five Star Movement and the populist-right League, the coalition is often described as a combination of alt-left and hard-right, but in fact it moves beyond conventional ideological categories. No wonder its members have been darkly described as “barbarians” by the Financial Times and “insurgents” by the Telegraph.

Something in the project of European integration is not working, and the elites who lead it have refused to adjust. The euro is failing miserably in southern Europe, yet the European commission wants to deepen economic and monetary union. The euro has powered German economic growth while saddling countries like Italy and Greece with austerity and debt. According to official government statistics by Istat, absolute poverty in Italy has doubled in the past decade, a few years after the euro was introduced as the country’s currency.

The new government’s eclectic program emphasizes environmentalism, claiming that “man and the environment are two sides of the same coin,” and calls for a reduction of carbon emissions and an end to fossil fuels. The mixed ideological character of the new coalition is illustrated by Alberto Bagnai, a left-wing euroskeptic economist who represents the League in the Italian Senate. His book, The Sunset of the Euro, decries the single currency as a means for Germany to exert its dominance in the Eurozone. Bagnai also strongly opposes mass immigration, calling it a tool to drive down wages and increase exploitation of workers: “It’s no surprise that ‘left-wing’ ‘intellectuals’ don’t care about immigrants’ impact on wages—it’s because they’re not low skilled workers.”

Even more radically, the 31-year-old leader of the Five Star Movement, Luigi Di Maio, has challenged the tyranny of economic metrics. In a speech prior to the election, he said: “The economic indicator for growth will no longer be GDP.” This represents a fundamental challenge to the free-trade post-war order, which has culminated in the rule of multi-national corporations over small businesses and enterprises.

To address Italy’s public debt crisis, the program rejects austerity measures and seeks to revisit EU treaties that recommend them. In place of austerity, the coalition has proposed a minimum salary, a universal basic income, and a lowering of the pension age. What has raised some eyebrows is the League’s proposal for a more libertarian flat-tax system. How can the government increase spending while also decreasing its revenue? The coalition claims that the program will be paid for by eliminating bureaucratic inefficiencies and by subsidies from the EU. And Italy does indeed have a problem with corruption—Five Star built its popularity by campaigning against it.

The new government also has a traditionalist family minister, the League’s Lorenzo Fontana, who opposes abortion and same-sex civil unions. Italy passed a law for same-sex civil unions only last year and is one of the few countries that has not legalized gay marriage. Fontana strongly opposes the civil-unions law, claiming: “They want to dominate us and erase our people.”

In another traditionalist initiative, the Five Star–League program seeks to reverse Italy’s plummeting birth rates. “It’s necessary to provide family welfare,” the program says. The program proposes measures to help women manage their motherly and professional roles by providing free child-care facilities, thus addressing one of the main reasons for the declining birthrate: the financial penalty imposed by childbirth. The case of Valeria Ferrara, a mother who was denied a Sunday per month to spend with her family by the multi-national Calvin Klein, Inc., is exemplary of this crisis. Both Five Star and the League have, in the past few years, proposed to end Sunday labor. Luigi Di Maio, the leader of Five Star, said, “unrestrained liberalization is making us poorer.”

The Five Star–League program also states that it will oversee the deportation of 500,000 illegal migrants currently living in Italy. Matteo Salvini, the head of the League, who holds the strongest position on immigration, will become minister of the interior under the new government. But even Di Maio, the head of Five Star, has indicated his opposition to mass migration. Last summer he said that the center-left government that has ruled Italy for the past five years had transformed the country into “Europe’s biggest port” for migrants. Di Maio also criticized the activities of NGOs operating in the Mediterranean and transporting migrants to Italian shores: “The EU doesn’t care about saving migrant lives, they just want the money.” The Five Star–League program has accordingly promised to “stop the business of smuggling” and take down “criminal organizations responsible for human trafficking,” which have caused “countless deaths in the Mediterranean.” As for financing the deportation of illegal migrants, the government would accomplish this by “directing funds used for hospitality towards repatriations.”

This would be the toughest stance yet taken by an EU member in Western Europe. (It is interesting to note that Switzerland, which is not part of the EU, has maintained very strict immigration controls and received very little criticism for it.) The measures proposed by the coalition prompted the president of the European Commission, Jean-Claude Juncker, to say that the European Commission will now “monitor the rights of African migrants in Italy.” This comment suggests that a collision over migration is imminent, particularly given the EU’s stance toward countries that have taken a tough stance on migration, such as Poland and Hungary.

On foreign policy, the Five Star–League program says it wants to “end sanctions on Russia.” Indeed, the coalition sees Russia as a strategic partner in combating “Islamic terrorism” in the region and in ending the conflicts in Syria, Libya, and Yemen. Despite the great displays of alarm over this fact, it merely reflects a growing consensus in Europe that relationships with Russia must change. “I do think we have to reconnect with Russia,” Juncker said at a conference in Brussels this week. “This Russia-bashing has to be brought to an end.”

Religion also plays a strong role in the program, a role often overlooked by the media. The League has pushed for the registering and monitoring of mosques in Italy. There have also been increasing appeals to a Catholic identity. Di Maio and Salvini have both shown uncommon reverence toward the Catholic Church. In September, Di Maio launched his campaign by observing the old Catholic custom of kissing the vial containing the blood of St. Januarius and bowing before the cardinal of Naples. In 2016, in front of Santa Maria Maggiore in Rome, Di Maio said: “The Church is my home. I am a Catholic.” Leftwing papers have responded by calling him “retrograde.”

Salvini may be even more outspoken about his faith. In March, just before the election, he held up a rosary at one of his rallies, “swearing allegiance to the Gospel and my people.” The chosen prime minister, Giuseppe Conte, a previously unknown figure, is a former leftist who turned to the Five Star Movement. Conte is devoted to Padre Pio, a Catholic saint famous for his stigmata and bilocation.

The Five Star–League program combines euroskepticism, environmentalism, strong borders, protection of families and small businesses against globalization, and respect for religion. It combines elements of left and right in a way that scandalizes well catechized political elites. If it succeeds, it will be the first real sign that we are moving beyond the postwar order.

The EU is under a lot of strain.

German Chancellor, Angela Merkel, might be looking at a weaker governing coalition if she isn’t able to get a solid grip on the migration problem in Germany. Britain’s Brexit continues to trek along, albeit at a sluggish pace, without much of a road map as to how it is going to be accomplished, and how the UK’s relationship with the EU will be positioned once the deadline finally comes. Italy here is considering renegotiating its relationship with the EU after a fashion, France is facing internal conflicts over migrants and the economic situation of average citizens, while Poland and Hungary are both defying the Union’s will on the migration matter. And last, but not least, the populace of Greece still isn’t too happy about the austerity measures it is undergoing, while international investors gobble up the nation’s infrastructure at an alarming rate, with a government that is just barely hanging onto power.

Then there are the security and energy issues to be solved.

Germany, and some others, are moving forward with a pipeline to import Russian gas, which some Eastern European nations are apathetic about, leading to some disagreement about where Europe’s energy security looks to. To top it all off, there are Trump’s tariffs and secondary sanctions threats relative to commerce conducted with Iran, a necessary component of the JCPOA’s survival, and the Nord Stream 2 pipeline, which puts Germany between the US and its Eastern neighbors over its energy policy.

But Trump, not merely a wild card in the deck, could pose as Europe’s saving grace, serving as a unifying factor for the bloc. While Europeans are facing lots of centrifugal issues which threaten to break it apart, Trump is the one problem which they all have in common, and is one which would offer a rallying point around which the Europeans can gather together to combat, after a fashion.

The situation in Europe, therefore, is one which necessitates a revision of its constituent relationships, a common plan to deal with migrants, both those already in Europe and with those yet to arrive, look out for the interests of the common person, a common policy towards the East, and a common political will to oppose unilateralism and extreme nationalism.

Published:6/21/2018 1:16:29 AM
[Markets] "Qatar Island": Saudis Launch Massive Canal Project To Cut Off Neighbor

It almost sounds too insane to be believed, but Saudi Arabia's move to further isolate neighboring Arab rival Qatar by literally turning it into an island is but the latest in an intense year long feud between the two countries that has already produced its fair share of bizarre headlines.

Tiny but ultra-wealthy Qatar is a peninsula which shares a 37.5 mile border (60km) with Saudi Arabia on the kingdom's northeast side and juts out from the Arabian peninsula about 100 miles into the Persian Gulf. 

Saudi media revealed this week the kingdom is quickly moving forward with ambitious plans to dig a 200 meter wide and 15-10 meter deep canal the entire length of the land border, effectively creating 'Qatar island' as some Mideast news sources are already calling it.

Of course, the Qataris don't appear to have a say in their own country's geographic fate, and the Saudis and Emirates further plan to locate nuclear waste sites and a military base along the proposed canal to boot. 

The so-called “Salwa Marine Canal Project” has reportedly opened up to bidding among five international companies that specialize in digging canals, with bids closing next Monday and the project to be awarded in 90 days, according to regional sources. The canal project is estimated to cost up to 2.8 billion riyals ($750 million) according to Saudi-based Sabq newspaper.

Qatar has remained defiant throughout its unprecedented summer diplomatic crisis with Saudi Arabia and other Gulf Cooperation Council (GCC) states which have brought immense pressure to bear on the oil and gas rich monarchy through a complete economic and diplomatic blockade imposed by its neighbors. Saudi and UAE officials have long accused Qatar of supporting terrorism, aligning with Iran, and meddling in the affairs of its gulf neighbors in a crisis that has resulted in the near complete unraveling of the GCC. 

The Salwa canal was first announced in April but many observers dismissed it as but the latest in outrageous Saudi claims and punitive measures aimed at Qatar. 

Newsweek reported in early April:

Apparently, Riyadh is not content with traditional isolation. The so-called “Salwa Marine Canal Project” would establish a military base in one area of the border and a nuclear waste site in another. The waste would come from the nuclear reactors that Saudi Arabia is planning to build. The border would then be clearly demarcated by a wide canal. The UAE would also build a nuclear waste site at its border’s closest point to Qatar.

But it now appears to be concretely advancing and not a bluff. 

Beyond nuclear waste and military installations, Riyadh further envisages beach resorts in Salwa, Sakak, Khor al-Adeed and Ras Abu Qamees, and marinas for yachts and leisure.

According to Dubai-based Gulf News the canal will be fully within the Saudi side of the border, meaning Qatar will have no rights or access to the waterway. Gulf News further (somewhat enthusiastically) notes that "In April, Saudi border guards took control of the Salwa crossing, effectively cutting off Qatar's only terrestrial link with the outside world."

The project will reportedly be funded entirely but UAE and Saudi private investors, and it will be interesting to see if it actually comes to fruition. If so, building what is essentially a massive 60km long mote to physically cut off an entire country would certainly constitute a first in the history of diplomatic warfare.

Published:6/21/2018 12:16:24 AM
[Markets] China's Oil Trade Retaliation Is Iran's Gain

Authored by Tom Luongo,

I’ve told you that once you start down the Trade War path forever it will dominate your destiny.

Well here we are.  Trump slaps big tariffs on aluminum and steel in a bid to leverage Gary Cohn’s ICE Wall plan to control the metals and oils futures markets.   I’m not sure how much of this stuff I believe but it is clear that the futures price for most strategically important commodities are divorced from the real world.

Alistair Crooke also noted the importance of Trump’s ‘energy dominance’ policy recently, which I suggest strongly you read.

But today’s edition of “As the Trade War Churns” is about China and their willingness to shift their energy purchases away from U.S. producers.  Irina Slav at Oilprice.com has the good bits.

The latest escalation in the tariff exchange, however, is a little bit different than all the others so far. It’s different because it came after Beijing said it intends to slap tariffs on U.S. oil, gas, and coal imports.

China’s was a retaliatory move to impose tariffs on US$50 billion worth of U.S. goods, which followed Trump’s earlier announcement that another US$50 billion in goods would be subjected to a 25-percent tariff starting July 6.

It’s unclear as to what form this will take but there’s also this report from the New York Times which talks about the China/U.S. energy trade.

Things could get worse if the United States and China ratchet up their actions [counter-tariffs]. Mr. Trump has already promised more tariffs in response to China’s retaliation. China, in turn, is likely to back away from an agreement to buy $70 billion worth of American agricultural and energy products — a deal that was conditional on the United States lifting its threat of tariffs.

“China’s proportionate and targeted tariffs on U.S. imports are meant to send a strong signal that it will not capitulate to U.S. demands,” said Eswar Prasad, a professor of international trade at Cornell University. “It will be challenging for both sides to find a way to de-escalate these tensions.”

But as Ms. Slav points out, China has enjoyed taking advantage of the glut of U.S. oil as shale drillers flood the market with cheap oil.  The West Texas Intermediate/Brent Spread has widened out to more than $10 at times.

By slapping counter tariffs on U.S. oil, that would more than overcome the current WTI/Brent spread and send Chinese refiners looking for new markets.

Hey, do you know whose oil is sold at a discount to Brent on a regular basis?

Iran’s.  That’s whose.

And you know what else?  Iran is selling tons, literally, of its oil via the new Shanghai petroyuan futures market.

Now, these aren’t exact substitutes, because the Shanghai contract is for medium-sour crude and West Texas shale oil is generally light-sweet but the point remains that the incentives would now exist for Chinese buyers to shift their buying away from the U.S. and towards producers offering substitutes at better prices.

This undermines and undercuts Trump’s ‘energy dominance’ plans while also strengthening Iran’s ability to withstand new U.S. sanctions by creating more customers for its oil.

Trade wars always escalate.  They are no different than any other government policy restricting trade.  The market response is to always respond to new incentives.  Capital always flows to where it is treated best.

It doesn’t matter if its domestic farm subsidies ‘protecting’ farmers from the business cycle or domestic metals producers getting protection via tariffs.

By raising the price above the market it shifts capital and investment away from those protected industries or producers and towards either innovation or foreign suppliers.

Trump obviously never read anything from Mises, Rothbard or Hayek at Wharton. Because if he did he would have come across the idea that every government intervention requires an ever-greater one to ‘fix’ the problems created by the first intervention.

The net result is that if there is a market for Iran’s oil, which there most certainly is, then humans will find a way to buy it.  If Trump tries to raise the price too high then it will have other knock-on effects of a less-efficient oil and gas market which will create worse problems in the future for everyone, especially the very Americans he thinks he’s defending.

*  *  *

Please support the production of independent and alternative political and financial commentary by joining my Patreon and subscribing to the Gold Goats ‘n Guns Investment Newsletter for just $12/month.

Published:6/20/2018 10:15:05 PM
[Entertainment] Peter Fonda apologizes for 'vulgar' Barron Trump tweet, studio calls comments 'reckless' Peter Fonda is apologizing for his now-deleted tweet suggesting Barron Trump be put in a cage with pedophiles in response to President Trump's zero tolerance border policies. "I went way too far," he says.
     
 
 
Published:6/20/2018 9:44:57 PM
[Entertainment] Can the Botched Doctors Give RuPaul's Drag Race's Detox the Abs of His Dreams? Detox, Botched 419RuPaul's Drag Race star Matthew Sanderson, better known as Detox, has given himself the perfect body, but some botched silicone injections left him with misshapen abs that the drag star just...
Published:6/20/2018 9:08:09 PM
[Markets] Black Hawks Down? Pentagon Admits Russian Chopper Trumps US

The U.S. Army’s Sikorsky UH-60 Black Hawk helicopters have fewer capabilities for critical missions than the Russian-made Mil Mi-17 (NATO reporting name: Hip) helicopters operating in Afghanistan’s Air Force, according to a new report from the Pentagon’s inspector general.

Afghan Armed Forces, which are jointly working with the Pentagon to develop and extend its Air Force’s capacities, have been flying the Russian-made helicopters since the early 1980s.

In response to President Putin’s covert/overt military operations in Ukraine and parts of the Middle East, U.S. lawmakers recently asked the Pentagon to phase out the Mi-17 sold by Rosoboronexport, Russia’s state-owned weapons exporter — in favor of American made helicopters in Afghanistan’s Air Force.

An Afghan Mi-17 helicopter flown by Lt. Col. Bakhtullah, 377th Afghan Air Force Squadron commander, takes off for an air-assault training flight, May 29 from Kabul International Airport, Afghanistan (2013). (Source: Afghanistan Air Force)

The transition to Black Hawk helicopters “presents several challenges that have yet to be fully addressed,” Pentagon Inspector General Glenn Fine wrote in a quarterly report, available to the public, on overseas contingency operations, posted last month after the first Black Hawk became operational in Afghanistan’s Air Force.

“Black Hawks do not have the lift capacity of Mi-17s. They are unable to accommodate some of the larger cargo items the Mi-17s can carry, and in general, it takes almost two Black Hawks to carry the load of a single Mi-17.

Furthermore, unlike Mi-17s, Black Hawks cannot fly at high elevations and, as such, cannot operate in remote regions of Afghanistan where Mi-17s operate.

According to 9th Air and Space Expeditionary Task Force-Afghanistan (9th AETF-A), the Mi-17s will play a “crucial role” in the near term fighting season. In the future, as Mi-17s phase-out of service, the aforementioned challenges will become more pronounced.”

The Pentagon’s inspector general detailed in the report that by the end of 2019, the Mi-17 helicopter inventory is expected to be reduced from 47 to 20. The fleet size is scheduled to decrease to 18 by the end of 2021 and then to 12 by the second half of 2022.

Bloomberg said that in 2017, after months of lobbying by Connecticut lawmakers, where the Black Hawk is manufactured (how convenient), Congress appropriated more than 800 million dollars for Afghanistan’s Air Force modernization program.

As of March 2018, the Pentagon delivered 8 Black Hawks with another 45 expected to arrive in the near term — with a total 159 planned over the next few years.

Army Lieutenant Colonel Kone Faulkner, a Pentagon spokesman, told Bloomberg in an email that the Defense Department concluded that Black Hawks could only perform 90 percent of the Afghanistan missions the Mi-17 fleet was performing.

Faulkner tried to spin a few positives about the Black Hawk, which he said, it “can fly at the required mission altitudes at which the Afghan Mi-17 missions are typically flown.”

He added, “in many cases, the UH-60 is as, or more, capable than the Mi-17” and that one version “provides more firepower than the Mi-17 variant, which is limited to rockets only and is less maneuverable.”

The Pentagon’s inspector general revealed that Afghanistan’s Air Force performs “80 percent of the maintenance tasks on their Mi-17s” and mostly relies on “contractor logistics support for the remaining 20 percent.” The inspector general said the Mi-17’s maintenance tasks are “much more conducive to the education level available in the general Afghan population than the UH-60As” when it comes to maintenance.

Faulkner again tried to point out more positives about the Black Hawks, adding that the helicopters have “significantly lower” operating costs than Mi-17s, and the transition will “enable a shift from a Russian supply chain to a well-established and reliable U.S. supply chain.”

While the military-industrial-complex with the help of Connecticut lawmakers has been rushing to sell their Black Hawks to Afghanistan, it is rare for a high-ranking Pentagon official to admit that Russian helicopters are far more superior than theirs. Is American (helicopter) Exceptionalism fading?

Published:6/20/2018 9:08:09 PM
[Entertainment] Watch Pete Davidson Blush as He Discusses Engagement to Ariana Grande on The Tonight Show Pete Davidson, Jimmy FallonWho knew Pete Davidson was a hopeless romantic at heart? In a sneak peak from Wednesday's The Tonight Show Starring Jimmy Fallon, the newly engaged Saturday Night Live star shouts...
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[Entertainment] Kristen Bell Reacts to Being Called a Power Couple Alongside Dax Shepard Kristen Bell, Dax ShepardWe here at E! News are the first to call Kristen Bell and Dax Shepard the ultimate power couple. But what does the couple think of the title? During a screening event for The Good Place...
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[Entertainment] Maria Shriver Opens Up to Oprah Winfrey About Raising Kind and Ambitious Children Oprah Winfrey, Maria Shriver When you have parents with the last name of Shriver or Schwarzenegger, life is bound to be a little bit more different than the average kid. But for Maria Shriver and Arnold...
Published:6/20/2018 7:15:00 PM
[Markets] Massive Battle For Southwest Syria Could Trigger US-Israeli Intervention

The long awaited battle for Daraa has begun despite repeated warnings issued to the Syrian government from the US not to extend its military campaign to the country's south, where the conflict first began with fierce anti-Assad protests in 2011 and then quickly spiraled into violence.

Fighting began Tuesday night as the army's elite Tiger forces assaulted an air base in northeast Daraa which had been under jihadist control — namely the US-backed FSA "Southern Front" group and allied Hayat Tahrir Al-Sham (formerly Nusrah, al-Qaeda). After liberating the base government forces are now pounding opposition controlled towns with artillery fire which have for years been a hotbed of the al-Qaeda and ISIS terror insurgency. 

The army and allied forces, including reportedly including Hezbollah special forces units, have penetrated deep into Al-Quneitra and Daraa governorates where a massive campaign is expected to begin at any moment for the final push to take control of the entire southwest. President Bashar al-Assad has vowed in recent interviews to liberate "every inch" of sovereign Syrian territory

Notably ISIS has long maintained a stronghold along the Israeli occupied Golan Heights and Jordanian border  something which Israeli leadership and media are all too aware of and appear to have turned a blind eye to. Western media has increasingly acknowledged Israel's "not so secret" quiet support to jihadists along the Golan border, with even the Wall Street Journal confirming weapons transfers and medical aid given to al-Qaeda insurgents.  

As early as 2015 former Acting Director of the CIA Michael Morell directly told the Israeli public, during a tour of the country that Israel's "dangerous game" in Syria consists in getting in bed with al-Qaeda in order to fight Shia Iran. 

Syria continues to ignore US warnings that it cease "unilateral [military] activity" in the southwest:

However, Israeli Prime Minister Netanyahu's top priority remains deterring Iran and Hezbollah in Syria, especially penetration of these forces near the Israeli border, which he has called a "red line" on which Israel would act — something also invoked during Israel's massive airstrikes on Damascus and other locations in May. 

The Syrian Army's ongoing push into Deraa was no doubt a key topic of discussion during Netanyahu's Monday visit to King Abdullah of Jordan — the first public meeting between the two leaders since 2014. Just last week Abdullah blasted Iran for what he described as “interferences in Arab affairs” and policies “that harm the principle of good neighborliness” while recalling the Jordanian ambassador to Iran in protest over events in Syria and Yemen. 

As the war for Syria's southwest heats up, and as Damascus continues to muster what are reported to be massive forces in preparation for the final major offensive, the potential for more Israeli or US and western allied intervention remains high. 

Below is a dispatch authored and submitted by Elijah Magnier, Middle East based chief international war correspondent for Al Rai Media, who is currently on the ground in the region and has interviewed multiple high level officials involved in the conflict.

The battle of Daraa against the “Islamic State” (ISIS) group (known under the name of Jaish Khaled Bin al-Waleed), al-Qaeda and the “Free Syrian Army” is happening without doubt. The Syrian government won’t take into consideration the recent US warnings that it might attack the Syrian Army, or Israel’s threat – Israel which is supporting Jihadists for years offering to these finance, intelligence information and medical assistance – to prevent the Damascus forces from reaching the borders. Damascus will also ignore the Russian-US-Jordanian agreement of protecting and respecting the de-escalation zone for very long.

Damascus asked its special forces under the command of General Suheil al-Hassan (known as al-Nimer – Tiger) to move to Daraa. These forces have been operating exclusively under the Russian military command over the entire Syrian geography. The Syrian government is also gathering anti-air missiles units in Daraa and in also at the back of the front around Damascus and have commanded its strategic missile units to be ready to intervene offering protection to the ground forces. This indicates the forthcoming battle is expected to be harsh and doesn’t exclude the intervention of the regional forces in Syria.

The Syrian command ignored the US and the Israeli requests to exclude Hezbollah and the Iranian allies from being present in Daraa. Thus, Syrian President Bashar al-Assad asked Hezbollah al-Ridwan Special Forces to take positions in Daraa and around it to participate in the forthcoming attack.

Sources on the ground believe the US is not expected to pull out of al-Tanf crossing between Syria and Iraq – as requested by Damascus in exchange of Hezbollah and Iran absence in Daraa – because Israel believed the battle is not going to take place. Therefore, the Syrian government has decided to engage in the Daraa’ battle and remove all jihadists from the south to regain total control of the territory or even impose a negotiation by force to reached a withdrawal of the US forces from al-Tanf.

The Syrian Army is also aiming to end the southern battle so it can move all offensive forces to the north and al-Badiya afterwards, to attack the remaining ISIS forces present in that part of Syria.

The US faces a dilemma with thousands of trained, supported and funded Syrian proxies militias in the border area between Syria and Iraq. These militias can be a burden if the US decides to withdraw because they are Arab and non-Kurdish forces. Thus, any agreement that returns al-Tanf to the central government means the retreat of these thousand militants to the area controlled by the Kurdish forces in al-Hasakah northern province, also under US occupation forces’ control.

This may cause ethnic battles between the Kurds and the Arab tribes of the region who refuse Kurdish dominance, especially bearing in mind that Ankara and Damascus look at the Kurdish cooperation with the occupying forces with a very hostile approach. Moreover, it is evident that no occupation force is destined to remain forever in an occupied country and that, sooner or later, the occupier historically knows that it will face popular resistance.

As for the Russian position in relation to the battle of Daraa, the military sources in the south of Syria said the Syrian Brigadier Suhail al-Hasan would not be present in the region without a special request from Russia. The “Tiger” forces are Special Forces operating under the command of Russia with the consent and agreement of President Bashar al-Assad.

Therefore, Moscow does not want any jihadist forces working with Israel or with the US to retain territory in Syria. Moreover, Russia is not aiming for a partial victory in the Levant now that the useful part of Syria (the most populated geographic area of the country) is liberated, with the exception of the north. This is why the south becomes a necessity that must be liberated.

Russia has bigger plans in the Levant: During my visit to the city of Palmyra and its surroundings, the presence of thousands of Russian troops is striking, indicating that Moscow is sending new infantry and special forces in very large numbers. This large presence has not been announced.

This could also indicate that Russia does not want the US to maintain a long-term sphere of influence in Syria and also wants to remain the only force in Syria as its sphere of influence. This perception of Russia’s approach towards Syria’s allies is complicated and difficult to achieve today. Moscow can’t hold the ultimate decision of who can stay or leave in Syria. Moreover, for the time being, Russia considers that all the allied forces – including Hezbollah and Iran and its allies – are absolutely necessary as long as there are US forces occupying the country.

Turkey is not a threat or a dilemma for Russia. Moscow and Ankara have reached various understandings since the battle of the Greater Aleppo to the battle of Ghouta and then the battle of Afrin and the Turkish spread in Idlib and its environs with the aim to strike and “divide” al-Qaeda (the most radical “Hurraas al-Deen” split from “Hayat Tahrir al-Sham” under Abu Mohammad al-Joulani at the request of Turkey).

Russia and Turkey consider the US as the biggest threat in Syria because of the “regime change” intention and the partition projects the US is capable of promoting, and the desire to create for the Kurds a special entity, not for the love of the Kurds, but to keep pressure on both Ankara and Damascus.

Thus, the battle of the south is coming despite Israeli harassment and striking the allied forces of Iran fighting ISIS in Albuqmal and its request – in vain – to see Hezbollah away from Daraa. Israel is trying to disrupt the stability of Syria but has failed to attract any serious attention to its necessity because the strategic goal today is to liberate the south. Assad is not worried about Israel’s concern and is far from assuming Israel’s border security and the 1974 demarcation line in the occupied Golan heights.

Damascus is working with its allies to liberate the south with no hesitation, free from any influence or threats of any magnitude, because the time has come to end al-Qaeda and ISIS in the south first, so that the army can move towards the eastern desert and concentrate on the US and Turkish occupation forces in the north.

Published:6/20/2018 7:15:00 PM
[Markets] Daimler Cuts Outlook, Blames Trump Trade War... Who's Next?

While US equity markets are indefatiguable (if you don't look at the Dow), amid a record spike in earnings expectations - that will never go down again... ever - it appears, Daimler may have just become the first to break the narrative (as real world trade war impacts come home), lowering its earnings potential for the year, citing increased import tariffs for US vehicles into the Chinese market for fewer than expected SUV sales and higher than expected costs.

Full Statement from Daimler:

Today, due to current developments, Daimler AG has made a new assessment of the earnings potential for the year 2018.

From today's perspective, the decisive factor is that, at Mercedes-Benz Cars, fewer than expected SUV sales and higher than expected costs - not completely passed on to the customers - must be assumed because of increased import tariffs for US vehicles into the Chinese market.

This effect cannot be fully compensated by the reallocation of vehicles to other markets. As another decisive factor, a negative effect on earnings is to be expected in the second half of the year in connection with the new certification process WLTP (Worldwide Harmonized Light Vehicles Test Procedure). Furthermore, earnings at Mercedes-Benz Vans are affected in connection with the recall of diesel vehicles. Additionally, earnings at Daimler Buses are negatively affected by the declining demand in Latin America.

As a result, Daimler has now the following expectations for EBIT (the operating result EBIT represents earnings before interest and taxes) in the year 2018:

  • Mercedes-Benz Cars: slightly below the previous year,

  • Mercedes-Benz Vans: significantly below the previous year's level,

  • Daimler Buses: in the magnitude of the previous year and

  • Daimler Group: slightly below the previous year's level.

And just like that the smoke and mirrors of unshakable EPS growth are blown away and smashed as the reality of escalating trade war rhetoric bubbles up to the real world with automakers the first to start cutting EPS expectations.

Here's who else will be next as the CEOs and investors come to terms with the reality of trade wars.

Lastly, as a reminder,  the biggest risk is that neither the US, nor China, is so far willing to indicate of a potential "out" to this classical tit-for-tat escalation, which in turn means that the risk of an all-out trade war, one which expands beyond merely the US and China, is growing.

As a result of escalating trade war concerns, Barclays recently estimated the impact in the worst-case scenario of an all-out trade war for US companies across sectors and US trading partners.

In a nutshell, the bank calculated that an across-the-board tariff of 10% on all US imports and exports would lower 2018 EPS for S&P 500 companies by ~11% and, thus, completely offset the positive fiscal stimulus from tax reform.

Barclays concludes that although protectionism was one of the four arrows of "Trumponomics," it did not materialize during the administration’s first year in office, when equity valuations reached an all-time high as sentiment improved with the market’s focus on the other three “progrowth” arrows – tax cuts, deregulation, and fiscal expansion. The risk here is that an unleashing of anti-trade policies and potential of a trade war could reverse the upward trend in valuations, which is already showing up in The Dow... but being ignored by Nasdaq...

Published:6/20/2018 6:44:04 PM
[Entertainment] Chloe Dykstra Speaks Out After Chris Hardwick Denies Sexual Abuse Allegations Chris Hardwick, Chloe DykstraChloe Dykstra says she's overwhelmed by the response to a recent essay she penned detailing years of alleged sexual and emotional abuse. Dykstra did not identify the alleged abuser publicly,...
Published:6/20/2018 6:44:04 PM
[Markets] Google's Artificial Intelligence Can Predict Your Death With 95% Accuracy

Authored by Mac Slavo via SHTFplan.com,

Google’s neverending quest to obtain as much information about you as possible has just crossed into a rather eerie territory.  The tech company’s artificial intelligence is now so advanced that it can predict when you will die with 95 percent accuracy.

Things feel as they are drifting toward the macabre when it comes to advances in technology.  Nothing seals that quite like the announcement of Google’s ability to predict your death with stunning accuracy using artificial intelligence. As reported by IFL Science, the new ability to use AI to predict death is outlined in a study recently published in npj Digital Medicine. The study involves new Artificial Intelligence (AI) that Google’s Medical Brain team have been working on. It has been trained to predict how likely it is that patients entering a hospital will make it out alive.

Bring on the death panels. As if things aren’t scary enough, imagine how horrifying this technology’s use could be especially if the government ever gains complete control of the healthcare system.  Google’s AI would simply say there’s not a high likelihood of a person making it out of the hospital alive, so no care will be given.  Humanity is most definitely devolving.

The AI is 95% accurate which is much more accurate than the current early warning score system used in hospitals now.

Overall, the study found that the AI was able to predict mortality 24 hours after admission with 95 percent accuracy at one of the hospitals trialed, and 93 percent at the other. This was significantly better than the hospital’s traditional predictive model (the augmented Early Warning Score), which predicted mortality with 85 and 86 percent accuracy respectively. –IFL Science

In one instance reported in the study, a patient with late-stage breast cancer was admitted to hospital. Her lungs were filled with fluid, she was seen by several doctors and then underwent a scan. According to the hospital’s assessment, she had a 9.3 percent chance of dying during her stay, based on her vital signs such as respiratory rate, blood pressure, and pulse.  Google’s AI also ran its own assessment on the same patient, assessing 175,639 data points on her record, the researchers wrote in their study. These included data points that aren’t normally considered during patient evaluations. The AI was able to access previously out of reach data, such as PDFs of notes made by doctors and nurses that indicated evidence of malignant pleural effusions (fluid build-up around the lungs) and potential risk of pressure ulcers. Looking at this data, the AI put the patient’s risk of death during her stay at 19.9 percent. She died 10 days after admission.

The accuracy of the predictions was put down to the extra data that the AI was able to crunch in comparison to what a human can do. Normally when predicting patient outcomes, the time-consuming part is putting all the data together into a readable format, Nigam Shah, an associate professor at Stanford University, told Bloomberg. “In general, prior work has focused on a subset of features available in the EHR [electronic health record], rather than on all data available in an EHR,” the authors wrote in their study. “Which includes clinical free-text notes, as well as large amounts of structured and semi-structured data.”

It sill feels overly creepy even though hospitals are assessing patients now.

Published:6/20/2018 5:43:44 PM
[Entertainment] Dietland's Kitty Is "Finding Her Voice" in a Badass Julianna Margulies Speech DietlandDietland is not messing around. On the AMC show, a terrorist group calling themselves Jennifer has started murdering men who have assaulted women, and as the head of Austen Media, Kitty...
Published:6/20/2018 5:43:44 PM
[Entertainment] Tim McGraw And Faith Hill Spill Secrets Behind Their Healthy Marriage Faith Hill, Tim McGraw, 2017 CMA Awards, ShowWhat's the secret to becoming country music's ultimate power couple? Tim McGraw and Faith Hill are finally answering the question on fans' minds. The world-famous performers...
Published:6/20/2018 4:43:43 PM
[Entertainment] 'I went way too far': Peter Fonda apologizes for 'vulgar' Barron Trump tweet Peter Fonda is apologizing for his now-deleted tweet suggesting Barron Trump be put in a cage with pedophiles in response to President Trump's zero tolerance border policies. "I went way too far," he says.
     
 
 
Published:6/20/2018 4:43:43 PM
[Markets] "A Perfect Storm": The Private Sector Must Buy 80% Of Italian Bond Issuance In 2019

A new analysis by Goldman looks at the post-ECB QE world and finds finds something troubling: having purchased virtually no Italian bonds in the past 2 years, the private sector will have to aggressively step up in 2019, and absorb 80% of gross Italian sovereign bond issuance.

First, a quick reminder of where we currently stand after last week's announcement by the world's biggest hedge fund that it will be further tapering and, soon, ending it purchases of newly-issued European bonds.

The ECB communicated last Thursday that, subject to incoming data, the Asset Purchase Programme (APP) will be extended from October to December at a pace of €15bn per month, and that net new purchases will then be wound down to zero.

Initiated in March 2015, the APP will terminate after three years and nine months, having accumulated a total portfolio of approximately €2.6trn in assets, mostly government securities (~€2.1trn – 80% of total QE holdings) and corporate/covered bonds (~€500bn).

At the end of this year, the ECB’s balance sheet will reach a total of €4.75trn, or more than 40% of the area’s GDP – a higher level than the Fed’s at the end of its QE. We calculate that the central bank will own around 27% of the stock of PSPP eligible and marketable government bonds issued by EMU member states, and just under half of the float of supranational bonds (e.g., ESM, EFSF) used to fund conditional rescue packages for the troubled peripheral countries during the crisis.

That said, it's not like after January 1, 2019 the ECB will simply go cold turkey, or as Goldman says "this is not
adieu for the APP but rather au revoir" for two reasons:

  • First, the QE purchases will continue through reinvestments for an extended period of time.  According to Goldman calculations, "the central bank will roll-over €15-25bn a month from 2019 onwards, as shown in Exhibit 2. These purchases will constitute the pace of monthly flows once the net purchases are terminated in December."

  • Second, the APP will remain a policy tool of the ECB, which could be reactivated should the need arise. To Goldman, "this suggests that, from being an  ‘unconventional’ instrument, asset purchases could be used in the future as a more ‘standard’ policy tool to pursue the ECB’s inflation objective."

There are some other complications, including that the ECB is largely tapped out when it comes to eligible German Bund purchases, which are now at the 33% limit of German bond holdings.

The ECB could also need to exploit some additional flexibility in conducting net purchases from now until December. The 33% issue/issuer limit on the ECB’s holdings, and the consequential scarcity of QE eligible securities in Germany and other smaller ‘core’ markets, could still require small adjustments to purchases of government bonds via substitution towards supranational agencies, or a further expansion of the pool of suitable bonds to buy under the public sector programme.

Still while for some eurozone states the ECB's reinvestment of bonds could be a sufficient "buffer" source of duration demand, for others it could be the source of the next crisis.

In Germany, for example, things couldn't be better in 2019, as not only is gross issuance of long-term bonds expected to decline, but - since it already owns so many Bunds - the central bank will reinvest around €50-60bn Bunds in its portfolio, continuing to absorb around 47% of the gross supply via purchases in the secondary market also next year.

The same can not be said for Italy, however, which is about to suffer the "perfect storm." Among major European markets, even though gross issuance of medium-/long-term bonds could diminish slightly next year - although it probably won't with the new government's plans to boost fiscal stimulus, and as the country with the third-largest ECB capital key, Italy will still see the lowest share of issuance absorbed by the ECB in 2019, with the private (or foreign official) sector required to absorb more than 80% of newly issued long-term government securities.

One look at the table above and it becomes clear that for the private sector to purchase €182BN in Italian bonds next year, one thing will have to happen: yields will have to go higher: far, far higher to make the paper attractive to investors who in addition to the loss of ECB as a backstop buyer, will have to soak up more Italian bonds than they have in years.

Recall this Citi chart which shows that in the past 2 years, the only net buyer of Italian debt was the ECB. Well, not anymore.

1

To be sure, the phase out of QE will impact other nations too: according to Goldman, the cumulative purchases of government bonds by the ECB have reduced German 10-year Bunds by as much as 50-80bp relative to where they would otherwise be. And naturally, despite the recent increase in EMU rates volatility, the effect on their Italian and Spanish counterparts is somewhat larger also on account of a compression in systemic risk embedded in these bonds. Goldman's conclusion:

All else equal, such effects should remain in place for some time after the end of QE purchases, until the market starts to discount a forthcoming reduction in the size of the ECB portfolio. The ‘flow’ effect of QE purchases, at the current QE pace close to -10bp for ‘core’ rates and around -15bp for ‘peripherals’ according to our estimates, will instead diminish from October, as a consequence of the forthcoming tapering. On a medium-term horizon, such a reduction in QE purchases constitutes, in our view, an additional source of uncertainty for peripheral rates.

In other words, the Italian "perfect storm" is about to get very windy, starting some time in October, and only get worse from there.

Published:6/20/2018 4:14:04 PM
[Markets] America's Debt Dependence Makes It An Easy Economic Target

Authored by Brandon Smith via Alt-Market.com,

There is a classic denial tactic that many people use when confronted with negative facts about a subject they have a personal attachment to; I would call it “deferral denial” — or a psychological postponing of reality.

For example, point out the fundamentals on the U.S. economy such as the fact that unemployment is not below 4% as official numbers suggest, but actually closer to 20% when you factor in U-6 measurements including the record 96 million people not counted because they have run out of unemployment benefits. Or point out that true consumer inflation in the U.S. is not around 3% as the Federal Reserve and the Bureau of Labor Statistics claims, but closer to 10% according to the way CPI used to be calculated before the government started rigging the numbers.  For a large part of the public including a lot of economic analysts, there is perhaps a momentary acceptance of the danger, but then an immediate deferral — “Well, maybe things will get worse down the road, 10 or 20 years from now, but it’s not that bad today…”

This is cognitive dissonance at its finest.

The economy is in steep decline now, but the mind in denial says “it could be worse,” and this is how you get entire populations caught completely off guard by a financial crash. They could have easily seen the signs, but they desperately wanted to believe that all bad things happen in some illusory future, not today.

There is also another denial tactic I see often in the world of politics and economics, which is what I call “paying it backward.” This is what people do when they have a biased attachment to a person or institution and refuse to see the terrible implications of their actions. For example, when we point out that someone like Donald Trump makes destructive decisions, such as the continued support of Israel and Saudi Arabia in Syria and Yemen, or the reinstatement of funding for the White Helmets in Syria who are tied to ISIS, Trump supporters will often say “Well what about Obama?”

This is a game of shifting accountability. Is one person worse than the other? Possibly. I say give it time and make notes. However, the negative decisions of one politician we don’t like do not diminish the negative decisions of another politician we might like. They should BOTH be held accountable.

The same goes for countries and economies. When an analyst points out that U.S. debt is at historic highs and is utterly unsustainable, people in denial will say “but what about China or Europe?” One does not negate the other and, of course, there are differences that make the situation in the U.S. far more tenuous.

Primarily I am talking about America’s endless dependency on the world reserve status of the U.S. dollar and, beyond that, the steady expansion of debt at low interest rates for the past decade.

The Federal Reserve, once the No. 1 buyer of U.S. debt, has essentially declared it is cutting off support and has begun dumping assets from its balance sheet. The only assets the Fed seems to be maintaining are Mortgage Backed Securities (MBS). All others are being cut, including Treasuries. The American economy is inexorably attached to the idea of our Treasury debt as a safe investment, with our national debt spiking above $21 trillion and many trillions more owed to entitlement programs depending on how you calculate the expenditures, there is a vital need for steady foreign investment in U.S. debt.

But what happens when investment in U.S. debt becomes politically unsavory? Consider the current escalation of the trade war; Many pro-dollar talking heads and cheerleaders have argued in the past that no nation has the guts to dump dollar denominated assets and risk the wrath of American “economic might.” But, already we have seen Russia dump half its U.S. Treasury holdings in a single month and the trade war has only just begun.

Is Russia’s action a sign of things to come? Will other nations like China follow the same strategy? We will have to wait and see, but I believe this is the inevitable outcome of the trade war if it drags on for the rest of the year.

America’s dependent nature, feeding off of foreign investment to support its debts, is a disaster waiting to happen. The concept of economic “recovery” is laughable until this issue is addressed.  And, entering into a trade war while ignoring this blaring weakness is foolish, to say the least.

Beyond the issue of government (taxpayer) debt, let’s not forget about American corporations and consumers. U.S. corporate debt as a percentage of gross domestic product is at historic highs not seen since the housing bubble of 2008 or the dot-com bubble of 2001. There is a distinct difference, though, that makes today’s bubble far more insidious. After years of near-zero interest rates, corporations have become addicted to cheap debt. So much so that they have been borrowing nonstop to support their own stock prices through stock buyback manipulation. But now the Fed is raising interest rates and has committed to expanded hikes in the future.

So, what will corporations do as the cheap debt dries up? Thus far, they are spending the majority of their Trump tax cut still trying to artificially prop up stock process. When this money runs out (and I believe it will much faster than the mainstream thinks), the existing debt of these companies will cost much more to finance, and future borrowing at the same pace will become impossible. This is a threat that is developing now, not in some far-off future.

Eventually, corporations will have to make deep spending cuts rather than borrow. This means mass layoffs, store closures and potential cuts to pensions. And, of course, no more stock buybacks, meaning a market crash will ensue.

What about the U.S. consumer? U.S. consumer debt is set to reach new highs by the end of the year; around $4 trillion by official estimates.  While discussion continues about the alleged “labor shortage” in the U.S., one thing is clear — the jobs that do exist do NOT pay wages that keep up with true inflation. When we see spikes in retail sales in the U.S. and this is applauded as economy recovery, very few mainstream analysts point out that higher retail sales are merely tracking higher inflation.

That is to say, consumers are spending more money on less stuff. Again, this is unsustainable, which is why consumer debt is exploding. Dependency on credit cards and loans is being used by the public to offset much higher costs. But as the Fed raises interest rates, this too will end. Higher Fed rates translate to higher credit rates as well as higher mortgage rates (indirectly). With higher interest payments comes a large drop in overall spending.

As you can see, there are at least two forces at work here that will end all talk of U.S. recovery and which undermine any notion of economic strength:

The first is the trade war, which I believe is a massive distraction designed to draw attention away from the actions of international banks and central banks.

The second is the Federal Reserve, which has addicted the country to cheap fiat and is now flushing the drugs. We cannot delude ourselves into thinking that this trend will remain slow or that it will not develop into a crash in the near term. We also cannot simply deflect to other countries like China or those in Europe as if their problems are somehow worse and therefore ours are not a concern.

The fact that the health of the US economy is inexorably reliant on the continued foreign demand for the dollar and Treasury debt means any reduction of the dollar's world reserve status or petro-status, or any decline in treasury purchases, will directly affect the carefully crafted image of America as a stable system.  Without a sudden and aggressive resurgence of domestic production and innovation America has no safety net in the event that our debt addiction is used against us.

The argument that the central bank can jump in at any time to monetize that debt and reduce the danger is also delusional.  This assumes first and foremost that the Fed WANTS to reduce the danger.  I believe they want the danger to increase, not decrease.  Debt monetization also has the added bonus of causing even more inflation as foreign investors dump their dollar denominated assets back into the US.  Monetization is a poison, not a cure.

The crisis is here, now. Seeing and accepting it allows us to prepare accordingly. Denying it as inconsequential sets people up as victims of their own bias and ignorance.

*  *  *

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Published:6/20/2018 3:44:18 PM
[Entertainment] Kylie Jenner, Travis Scott and Stormi Take Family Trip to France Kylie Jenner, Travis Scott, Met Gala 2018, CouplesTravis Scott had a gig in France, so he and Kylie Jenner made the trip a family affair. The two jetted off from Los Angeles on Wednesday on a private jet with their four-month-old...
Published:6/20/2018 3:44:18 PM
[Entertainment] The Good Place Season 3 Scoop: "You Will Be Messed With" Kristen Bell, The Good Place finaleThe Good Place is not averse to changing things up. Just look at the season one finale...and then the twist in the season two finale. The second season ender transported some of the...
Published:6/20/2018 3:13:47 PM
[Markets] Big-Tech Blasts Higher As Dow Slumps To Worst Losing Streak In 15 Months

As long as you only look at small caps and big tech...

Since Trump escalated the trade wars last week, futures show the divergence between the Nasdaq and Dow best...

 

And while Nasdaq and Small Caps surged - on yet another short-squeeze - The Dow struggled to stay green all day...

 

The Dow is down 7 days in a row - the longest losing streak since March 2017...

 

Another day, another short-squeeze... (13 of the last 15 days have seen "most shorted" stocks rise)...

 

This is the biggest short-squeeze in the history of the data...as "most-shorted" stocks have led the recent buying panic...

 

US Tech stocks continue to diverge from... well... everything...

FANG soared...

Notably outperforming Financials once again...

 

Treasury yields rose modestly (1-3bps) once again today - back to practically unchanged on the week...

 

10Y TSY Yield rose today to unchanged on the week...

 

The Dollar Index traded sideways once again, still taking a breather from the impact of Draghi last week...

 

Cryptocurrencies managed to bounce back (on Tether headlines) today after Bithumb hack headlines overnight...

 

WTI managed gains after a big surprise crude inventory draw but PMs and copper lagged...

 

Gold buys the most platinum ever...

 

Finally, Exceptional USA leads the world...

 

 

 

 

 

 

 

 

Published:6/20/2018 3:13:47 PM
[Featured News] Here’s what’s in President Trump’s executive order to address illegal alien family separation

By R. Mitchell -

Donald Trump signs tax reform into law 12-22-17

President Donald Trump signed an executive order Wednesday that seeks to end the separation of suspected illegal alien adults from their children while maintaining the administration’s zero-tolerance policy on illegal immigration. The Executive Order Affording Congress an Opportunity to Address Family Separation attempts to end the necessity of separating suspected illegal aliens ...

Here’s what’s in President Trump’s executive order to address illegal alien family separation is original content from Conservative Daily News - Where Americans go for news, current events and commentary they can trust.

Published:6/20/2018 3:13:47 PM
[Entertainment] The Truth About Brad Pitt and Angelina Jolie's Divorce Angelina Jolie, Brad PittMost weekends Brad Pitt fills his hours with extracurriculars. That might mean dinners out with his tight group of guy friends ("Most of whom are not in the industry," reports one source),...
Published:6/20/2018 2:43:09 PM
[Markets] Active Managers Go 'All-In' Again As "Growth/Value Bubble Looks Ominously Similar To Late 1999"

Despite trade wars, central bank tightening, declining economic fundamental data, and an Emerging Market crisis, according to one survey, active US investment managers are presently more than 100% invested, on average.

Source: Dana Lyons' Tumblr

However, while US equities continue to charge ahead, alarm bells elsewhere are ringing very loud...

Judging by the reaction in China, you would've thought global markets were in for a thrashing after President Donald Trump's latest escalations on trade.

However, as Bloomberg notes, the question of why American equities keep skating past a worsening trade conflagration has been baffling for strategists.

“We’ve had more negative catalysts and more negative pull this year than we’ve had for a long time, but the positives continue to prevail in the investor’s mind,” Jeff Carbone, a managing partner at Cornerstone Wealth in North Carolina, said by phone.

“They’re shrugging off the negativity and taking the positive to a greater extent that this is not the end.”

As Bloomberg notes, the ignorance of risk is everywhere: Equity funds are only a trifle less long than at the height of January’s euphoria.

It’s in markets for call options, where individual investors are engaged in a buying binge of historic dimensions.

It’s in tech stocks (favored by short sellers), and ones with shaky balance sheets, all of which recently surged...

On the back of an historic short-squeeze...

 

In credit markets, various indicators are flashing bright red. For instance Bank Loans have been pummeled the last few days...

“The scary thing is that everyone keeps warning about leverage but then keeps reaching for the yield that BBB provides,” said Andrew Forsyth, a portfolio manager with BNP Paribas Asset Management.

 

Emerging Markets have been a bloodbath in recent weeks...

With 42 straight days without inflows for the biggest EM ETF...

 

It’s not like people haven’t been warned. They have their memories of February and March, and strategists at banks like Morgan Stanley and Goldman Sachs have repeatedly urged investors to rein in optimism, citing everything from politics to peak earnings and monetary tightening. Earlier today, Citigroup Inc. flagged a potential bubble in growth stocks.

“This is fine for now, but we think by year end such a ‘risk on’ hierarchy will be misplaced given the more uncertain outlook posed by ‘peaky’ growth rates and ever tightening financial conditions,” Mike Wilson, chief U.S. equity strategist at Morgan Stanley wrote in a note to clients Monday.

He urged investors to go defensive in anticipation of a rotation out of companies whose growth is tied to economic growth and upgraded utility stocks.

But the caveats have gone unheeded.

Wilson isn’t alone among analysts who see trouble brewing. As Bloomberg reports, the rally in growth stocks brought flashbacks of the internet bubble to Citigroup strategists led by Robert Buckland, even as valuation premiums are less than half of those from almost two decades ago.

A collapse would bode ill for a market whose gains have been increasingly anchored on tech giants such as Amazon.com Inc. and Facebook Inc.

“Price action of the U.S. growth/value trade looks ominously similar to late 1999,” the strategists wrote.

“Watch out for a growth bubble.”

With the price of call options now trading above their historic average, investors should sell them to reap extra returns in a market whose upside appears limited with valuations stretched, according to Rocky Fishman, an options strategist at Goldman Sachs. The firm predicted the S&P 500 will end next year at 3,000, or an 8 percent increase from the last close. That’d be below the 45th percentile in the index’s history over any 18-month period.

“The potential for upside surprises in U.S. equities is lower than the compensation received from elevated call prices,” he wrote in a note.

Coincidentally or not, such indications of retail euphoria flared up in January, just before the S&P 500’s first 10 percent correction in two years. It also accompanied the bull market peaks in 2000 and 2007.

Published:6/20/2018 2:43:08 PM
[Featured News] Executive Order Affording Congress an Opportunity to Address Family Separation [Full Text]

By R. Mitchell -

Donald Trump signs healthcare executive order 10-12-17

President Donald Trump signed the Executive Order Affording Congress an Opportunity to Address Family Separation on June 20, 2018, after Congress failed to act. By the authority vested in me as President by the Constitution and the laws of the United States of America, including the Immigration and Nationality Act (INA), ...

Executive Order Affording Congress an Opportunity to Address Family Separation [Full Text] is original content from Conservative Daily News - Where Americans go for news, current events and commentary they can trust.

Published:6/20/2018 2:43:08 PM
[Markets] Regulators Stunned By Deutsche Bank's Spectacular, 12x VaR Trading Blowup

Until recently, Deustche Bank was best known for being the worst managed megabank in the world, for having attempted rigging and manipulating virtually every single market and getting caught doing it, for having been "secretly" added to the Fed's "troubled bank" watchlist, for having been told by the ECB to simulate a "crisis scenario", for "accidentally" transferring €28 billion to an outside account, and of course, for having some $50 trillion in gross notional derivatives on its books.

As of today it is also known for having reckless traders on "full tilt" who go all in, bet the house, and lose.

As first noticed by Bloomberg, and disclosed publicly in a May 7 Federal Financial Institution filing, unknown Deutsche Bank traders suffered a staggering one-day loss in the first quarter that was almost 12x VaR, or 12 times what DB's risk officers have estimated for regulatory purposes it might lose on a typical day.

"Even a loss of two or three times VaR on a given day is unlikely. Twelve times VaR is extraordinarily unlikely," MIT finance professor Andrew Lo told Bloomberg.

This loss, which is unrivaled in either Deutsche Bank history, or in other banks’ first quarter reports - was oddly left out of Deutsche Bank’s earnings report, and as BBG notes, "raises questions about U.S. regulators’ ability to have an accurate picture of a foreign bank’s operations if metrics such as value-at-risk, or VaR, show only a fraction of potential trading exposure." It also confirms that the Fed has ample reasons to be worried about a bank which is willing to not only gamble the house on some wild trade, but also lose as a result.

The staggering, record Q1 loss is more than 6x greater than the next largest disclosed VaR exception, that of BNP Paribas. Most banks were well under VaR as they should.

"Such a high trading loss is off the charts," said Gregor Weiss, a professor at Leipzig University and an expert in financial risk management. "It’s definitely something a supervisor will look into."

And they did: the issue of the giant loss, and subsequent attempted cover up (or at least lack of disclosure) is particularly stark at Deutsche Bank, which has increased capital levels at its U.S. business after multiple failed stress tests and cease-and-desist orders. More from Bloomberg:

Multiple U.S. regulators, including the Federal Reserve, inquired about the outsized loss, according to a person with knowledge of the discussions. Eric Kollig, a Fed spokesman, and Richard Loconte, a spokesman for New York’s Department of Financial Services, which supervises part of Deutsche Bank’s U.S. business, declined to comment

While Deutsche Bank didn’t disclose the size of the loss, one can back into it based on the disclosed average regulatory value-at-risk during the period which was was $30.8 million, which would imply that the total loss was roughly $400 million, although as Bloomberg caveats, because daily variations in the figure aren’t disclosed, it’s impossible to know what the exact loss was.

And since the gargantuan one-day loss took place in a quarter in which DB reported trading revenue of negative $64 million, indicating losses on trading positions - while the Barclays and Credit Suisse each reported more than $100 million of positive revenue - we can be further assured that this was indeed some spectacular trading blow.

According to Bloomberg calculations, the extreme day was one of four in the first quarter in which Deutsche Bank’s U.S. traders had a loss that surpassed the firm’s regulatory VaR estimate, however it is unlikely that any of the other three came even remotely close to 12x VaR.

Others did much better:

no other bank required to file quarterly reports with the Fed detailing significant trading activities had more than two such days, and none had a daily loss that even doubled its estimate, according to a review of the 33 filings from U.S. lenders and the local units of foreign firms. Deutsche Bank had just one such day all of last year. Exceeding the estimate too often causes a bank’s capital requirements to rise.

Needless to say, it’s been a tumultuous year for Frankfurt-based Deutsche Bank, which following a series of unfortunate events, reported the latest abysmal quarter. Days after the quarter closed, Deutsche Bank named Christian Sewing - previously its deputy chief of risk - to take over as chief executive officer.

If only more risk managers were at the bank at the time its traders were taking on 12x VaR risk positions, the quarter may not have been that terrible.

As for the consequences... "The firm finished a months-long strategy review shortly thereafter, announcing U.S. operations would significantly shrink as part of a global overhaul."

Some 10,000 workers are expected to be fired; it is unclear just how much of a factor that spectacular trading loss was in the CEO's decision to cut headcount by 10%.

As Bloomberg concludes, "a number of leaders and dealmakers in the U.S. have left the bank amid the shakeup. In a letter to staff this month, Sewing said the firm has taken steps to reorganize its business, bolster capital and reduce risks."

"Many of you are sick and tired of bad news," he admitted.

And now there's more.

Published:6/20/2018 2:13:55 PM
[Opinion] Leftists Taking Language Instruction from Corporations

By Michael R Shannon -

Jordan Peterson, a Canadian professor of psychology at the University of Toronto, is enjoying some measure of fame and its attendant notoriety for boldly coming out in support of common sense. He’s even steadfast enough to continue his support when it conflicts with edicts from the leftist Speech Police. This ...

Leftists Taking Language Instruction from Corporations is original content from Conservative Daily News - Where Americans go for news, current events and commentary they can trust.

Published:6/20/2018 2:13:55 PM
[Entertainment] TV Scoop Awards 2018: Vote for the Best Villain and Best Guest Star TV Scoop Awards, Villain and Guest StarThe TV Awards continue! Today you get to vote for this year's best villain and best guest star, and there are some very good names to choose from if we do say so ourselves. TV was not...
Published:6/20/2018 2:13:55 PM
[Entertainment] The Chicken vs. The Model: The Bachelorette's Epic Two-on-One Is Here The Bachelorette, Jordan Kimall, David RavitzThe showdown we've all been waiting for is just about here. It might also be the showdown we've all been dreading, but either way, it's here, and E! News has the exclusive...
Published:6/20/2018 1:43:04 PM
[Markets] Spanish Students Given 24 Hours To Leave Dorms To Make Room For Aquarius Migrants

The Spanish government's decision to accept a boat carrying more than 600 migrants, a boat that was refused permission to dock by both Italy and Malta, has backfired on a group of students in the city of Alicante, who have been asked to leave their dorms within 24 hours to make room for the refugees. According to RT, Pedro Sanchez, Spain’s newly appointed socialist prime minister who replaced Mariano Rajoy following a no-confidence vote earlier this month, agreed to shelter the passengers of the Aquarius, a group of migrants from sub-Saharan Africa who were rescued from rickety vessels in the Mediterranean by the ship. After declaring that "the good times for illegals are over", Italy’s newly installed anti-immigration government blocked the ship and urged its neighbor, Malta, to accept the migrants. Malta also declined, prompting Spain and its new left-wing government to intervene.

Acquarius

Now, several hundred students, who are paying 750 euros a month to live in the La Florida dormitory in Alicante, must leave to make room for children aged 12 to 17 who are being brought to the dormitory via bus following the ship's arrival in Spain on Sunday. The authorities explained that the eviction was necessary given the "emergency situation" caused by the migrants' arrival.

One students' mother told local media that the students were asked to leave because the incoming refugees would have "many diseases" and possibly pose a "health risk." And while students said they're "not against helping those in need" they're worried about how they will finish their studies.

"We’re not against helping those in need, but it isn’t fair for my son to be removed from his residence and left on the street in the middle of his studies," one woman said, adding that her son needed to complete his course in German in order to qualify for a new job in that country.

The provisional government has assured inquiring media outlets that it will cover the students' expenses and find new temporary accommodations for them. We would advise the rest of Spain's college students to consider packing a "go-bag", because the Italian government over the weekend refused permission to dock to two Dutch-flagged ships carrying migrants, which are now sitting off the coast of Libya. That means more migrants could be on their way to Spain in the near future.

Published:6/20/2018 1:43:04 PM
[Entertainment] Ariana Grande and Pete Davidson Enjoy a Dinner Date at Bobby Flay's Restaurant Ariana Grande, Pete DavidsonCelebrating some new digs? Pete Davidson and fiancée Ariana Grande were spotted on a dinner date at Chef Bobby Flay's restaurant Gato in New York City on Tuesday, days after the...
Published:6/20/2018 1:13:01 PM
[Markets] "Things Have Changed" - Giuliani Says Decision On Trump-Mueller Interview Coming In July

Trump lawyer Rudy Giuliani has offered yet another update on the ongoing negotiations with Special Counsel Robert Mueller and his team over the terms of a possible presidential interview, according to the Washington Post. And Mueller likely won't be happy. A final decision on whether Trump will assent to an interview won't be made until mid- or late-July, Giuliani said. Although, at this point, it sometimes seems like Giuliani is just taunting and stalling, and that Trump has already decided to forgo an interview and dare Mueller to try issuing a presidential subpoena. After all, Giuliani said last week that a decision would arrive by the end of this month.

"I’m advising him to stay put, to hold our horses a little," Giuliani told The Washington Post in an interview, about an hour after Giuliani said he spoke with Trump. "I doubt August, and I doubt too far into July. But I do think things have changed."

"I’d like to get it done, our part over to them by July 4," he said, but added that developments at the Justice Department could lead him to advise the president to hold off.

Of course, Giuliani and Trump obviously feel that the Inspector General's report, which highlighted extreme anti-Trump political bias within the ranks of the FBI - though it ultimately exonerated the DOJ and the bureau's senior leadership and opted not to impugn the Mueller probe - has bought the president some time. Last week, Giuliani said he'd use the report to undermine the special counsel's probe. Giuliani added that, if talks collapse in the coming weeks, he's unsure whether Mueller would try to subpoena the president, which would likely trigger a legal battle that would rise all the way to the Supreme Court.

GIuliani

Giuliani denied that Mueller was pressing Trump's team to make a decision.

"We just don’t know," Giuliani said. "They have an argument for it and against it. It could blow up in their face and they’d have to just file a report. At this point, they’re not pressing us."

Mueller has reportedly promised that, if the president agrees to a sit-down interview, he could finish a report on whether Trump tried to obstruct the probe into Russian interference in the 2016 election within 90 days.

Then again, Giuliani has also scoffed at the suggestion that he'd let Trump sit down with Mueller.

"Do I look crazy?" Giuliani responded. "So far, you know, I still have all my senses, and I’m a heck of a lawyer. And I get drummed out of the profession if I did. I mean, the reality is, you don’t put your client in a kangaroo court."

We imagine we'll hear more from Giuliani next week, when he announces yet another delay on Trump's long-awaited decision on whether to meet Mueller face-to-face.

Published:6/20/2018 1:13:00 PM
[8c9001f5-4e2b-42ea-b43e-48187d19b15a] ABC, NBC have the most failed new series, study shows ABC reportedly has the highest failure rate of the 2017-18 season so far, but NBC could still finish the season as the biggest loser among major broadcast networks. Published:6/20/2018 1:13:00 PM
[Entertainment] Justin Bieber Holds Hailey Baldwin Close on Set of "Top Secret" Video Shoot Hailey Baldwin, Justin BieberJustin Bieber and Hailey Baldwin continue to fuel romance rumors. The 24-year-old singer and the 21-year-old model were spotted getting cozy in Los Angeles on Tuesday. Pictures show...
Published:6/20/2018 12:42:37 PM
[Entertainment] George and Amal Clooney Donate $100,000 Toward Helping Migrant Children Separated From Their Families at the Border Venice Film Festival, George Clooney, Amal ClooneyWhen it comes to migrant children forcibly separated from their parents at the U.S.-Mexico border, George Clooney and Amal Clooney are taking a stand--with inspiration from their own children....
Published:6/20/2018 12:12:33 PM
[Markets] Comey Hits Back At Hillary: "She Doesn't Understand What Her Case Was About"

?James Comey hit back at Hillary Clinton after the former secretary of state sniped at him over a Justice Department inspector general report which revealed that the former FBI director used a private email address to conduct official business - while his FBI was investigating Hillary for her own use of private systems. 

In an interview with the German newspaper Die Zeit, Comey refused to apologize to Clinton - stressing the difference between his personal use of email for unclassified information vs. her use, which involved classified information. 

“No. And here’s why," Comey said when asked if he would apologize. "I don’t want to criticize her, but it shows me that even at this late date, she doesn’t understand what the investigation in her case was about.

“It was not about her use of a personal email system, and she didn’t get that during the investigation, because she used to say ‘Colin Powell when he was secretary of state used AOL,’ that was not what it was about,” Comey explained. “It was about communicating about classified topics on that system when those topics have to be done on a classified system.

Comey defended his use of personal email - saying he only used it for things like sending himself drafts of speeches.

“What I would do, is when I had to write speeches—I would write my own speeches—I would type them at home and then gmail them into my government account,” Comey said. “Or, if I still had to work on the draft, I would send it home so I could work on it on my laptop.”

I was not talking about anything remotely classified and the inspector general didn’t say that as well,” Comey said. “But I get why the tweet, and I get why people are focused on it, but it’s a totally different thing.”

The former FBI Director also touched on the text messages uncovered between FBI Agent Peter Strzok and former FBI attorney Lisa Page, who were having an extramarital affair together and harbored extreme anti-Trump / pro-Clinton bias.

"We archive the texts, so maybe it's a sign we don't have the brightest people working at our organization," joked Comey, adding "I never saw any indication of bias and Peter Strozk did the first draft of my letter to Congress on October 28th that Hillary Clinton blames for her losing the election, so how exactly is he trying to get Donald Trump?"

"I don't see any evidence of a conspiracy, if the president and his allies want to claim a conspiracy they have to encompass all the data, I don't see how you could approach this and conclude we were on Hillary Clinton's side or on Donald Trump's side and I never saw any indication from those two people," he said.

Comey initially responded to the Inspector General's report in a New York Times op-ed last week, the day the report came out. He was sure to point out that the IG report "found no evidence that bias or improper motivation affected the investigation," and said that "in hindsight I think we chose the course most consistent with institutional values."

Whatever those are...

 

 

Published:6/20/2018 12:12:33 PM
[Politics] Fewer See Benefit of Summer Break, But Still Value Summer Work

As summer vacation begins, most adults still see the value in the break for students and in work for young people during this break. They’re likelier to think it will be easier for young people to find summer jobs now, though.

A new Rasmussen Reports national telephone and online survey finds that 52% of American Adults think most students learn life lessons during summer vacation that could never been learned in a classroom, though that’s down from 57% four years ago and 71% in 2011. 

Special Midterm Election Offer: Between June 11 and 24, 2018, you can get 6 months of Rasmussen Reader service for 60% off of the regular monthly price – just $12.00 . Sign up today!

(Want a free daily e-mail update? If it's in the news, it's in our polls). Rasmussen Reports updates are also available on Twitter or Facebook.

The survey of 1,000 American Adults was conducted on June 13-14, 2018 by Rasmussen Reports. The margin of sampling error is +/- 3 percentage points with a 95% level of confidence. Field work for all Rasmussen Reports surveys is conducted by Pulse Opinion Research, LLC. See methodology.

Published:6/20/2018 12:12:33 PM
[Entertainment] Bachelor in Paradise Season 5 Premiere Date Revealed Bachelor In Paradise, LogoGet ready for some summer lovin'. Bachelor in Paradise is almost here, people, with ABC officially announcing the premiere date for season five on Wednesday. BIP is set to...
Published:6/20/2018 11:42:49 AM
[Entertainment] Steve Martin and Martin Short Describe Their Colonoscopy Parties With Tom Hanks Steve Martin, Martin Short, Tom Hanks, Walter Parks, Jimmy Kimmel Live!Steve Martin, Martin Short and Tom Hanks' parties sound like a plethora of fun...and kind of gross. On Jimmy Kimmel Live! on Tuesday, host Jimmy Kimmel recalled how every other year,...
Published:6/20/2018 11:12:17 AM
[Entertainment] From Horrific to Human, The Handmaid's Tale's Yvonne Strahovski on Serena Joy's Big Year The Handmaid's Tale, Yvonne StrahovskiShe waited. She scowled. She watched. Now, with season two, it's Yvonne Strahovski's time to shine on The Handmaid's Tale. As Serena Joy Waterford, Strahovski spent much of...
Published:6/20/2018 10:42:10 AM
[Entertainment] Cher Eats a Caterpillar on The Late Late Show to Avoid Naming Her Favorite Lovers Cher, Late Late ShowOn Tuesday, Cher ate through one caterpillar. But she was still hungry. And so was James Corden--for information. The 72-year-old pop icon appeared on an episode of The Late Late Show...
Published:6/20/2018 10:12:08 AM
[Markets] Goldman CEO: "Too Arrogant" To Think Crypto Won't Work Out Because It's "Unfamiliar"

While Jamie Dimon, Warren Buffett, Charlie Munger, and Bill Gates seem more than happy to denigrate cryptocurrencies in their most ignorantly comedic ways, Goldman CEO Blankfein is more pragmatic than to "arrogant" enough to argue cryptocurrencies cannot be adopted on a large scale only because they are “uncomfortable” or “unfamiliar.”

Authored by Helen Partz via CoinTelegraph.com,

Goldman Sachs CEO Lloyd Blankfein reiterated his positive stance on cryptocurrencies in an interview with Bloomberg at the Economic Club of New York, June 19.

image courtesy of CoinTelegraph

When asked about the chances of crypto to become a “real issue,” Blankfein said that the adoption of cryptocurrencies like Bitcoin (BTC) could happen similarly to how the adoption of paper money, which replaced gold and silver coins, has happened.

Addressing the evolution of money, Blankfein pointed out the common features between paper money and crypto, apparently implying that they both do not have intrinsic value. Noting that paper money has managed to become the main form of money regardless of that, he then rhetorically asked: “why couldn’t you have a consensus currency?”

According to Blankfein, it is “too arrogant” to argue that cryptocurrencies cannot be adopted on a large scale only because they are “uncomfortable” or “unfamiliar.”

In 2017, Blankfein made a similar statement, claiming that people first distrusted paper currency and later accepted it. He then implied that Bitcoin could be adopted as a means of exchanging value in the future, even if it is not widely accepted today.

“But there is a lot of things that there weren't for me in the past that have worked out very well. If it was 20 years forward and it worked out, I could tell you why it worked out. But based on everything that I know, I am not guessing that it will work out.”

Goldman Sachs as a whole is known for its sceptical stance on cryptocurrencies. Back in 2014, the company argued that Bitcoin is not a currency. In 2017, it acknowledged that it has become more difficult for institutional investors to ignore Bitcoin and other cryptocurrencies. In late 2017, the company was even rumored to be opening its own crypto trading desk.

Despite refuting the reports in early 2018, Goldman Sachs eventually did turn to crypto, claimingthat Bitcoin “is not a fraud,” and revealing plans to buy and sell cryptocurrency. In May, Goldman Sachs-backed Circle app launched a new feature that makes it easier for “newbies” to enter the crypto market.

Published:6/20/2018 10:12:08 AM
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Published:6/20/2018 9:42:13 AM
[Politics] Those Closely Following Trump Choose TV News

In this day and age, people can get their news from a variety of different mediums. For voters closely following news related to President Trump, the television is a must-watch source.

A new Rasmussen Reports national telephone and online survey finds that 49% of Likely U.S. Voters who are following news reports about Trump’s actions and policies Very Closely get most of their daily news from TV programs. In a distant second is the internet, at 25%, followed by the radio at 11%. Only seven percent (7%) who follow news about the president Very Closely turn to newspapers for information, while three percent (3%) look to social media. (To see survey question wording, click here.)

Special Midterm Election Offer: Between June 11 and 24, 2018, you can get 6 months of Rasmussen Reader service for 60% off  of the regular monthly price – just $12.00 . Sign up today !  

(Want a free daily e-mail update? If it's in the news, it's in our polls). Rasmussen Reports updates are also available on Twitter or Facebook.

The survey of 1,000 Likely U.S. Voters was conducted on June 17-18, 2018 by Rasmussen Reports. The margin of sampling error is +/- 3 percentage points with a 95% level of confidence. Field work for all Rasmussen Reports surveys is conducted by Pulse Opinion Research, LLC. See methodology.

Published:6/20/2018 9:42:13 AM
[Markets] Tether Responds To Bitcoin Manipulation Charges, Confirms "All Tethers Backed By US Dollars"

One week ago, cryptos tumbled when a new iteration of a well-known allegation of bitcoin manipulation reemerged: a research paper claimed to have found a pattern whereby tethers were being spent to prop up bitcoin at key moments, which to the authors suggested manipulation.

As the research reported published by John Griffin, a University of Texas professor known for flagging suspicious activity in the VIX benchmark, "Tether seems to be used both to stabilize and manipulate Bitcoin prices."

To be sure, as we have noted repeated and as Bloomberg wrote last week, questions about Tether and Bitfinex had dogged the cryptocurrency world since last year, when Bitfinex lost banking relationships yet continued to operate. The CFTC eventually subpoenaed both firms in December, seeking proof that Tether is backed by a reserve of U.S. dollars, as it claims.

Last week's allegations prompted the following response from Bitfinex Chief Executive Officer JL van der Velde: “Bitfinex nor Tether is, or has ever, engaged in any sort of market or price manipulation. Tether issuances cannot be used to prop up the price of Bitcoin or any other coin/token on Bitfinex."

A bigger question was whether every tether - a so-called "stablecoin" that depends on full USD backing to maintain its peg to $1. - actually has said dollar backing.

And in what should come as good news to the crypto community, on Wednesday morning Tether said its bank deposits of $2.55 billion were confirmed by the law firm co-founded by FBI director Louis Freeh as the company seeks to reassure investors that its cryptocurrency is backed by U.S. dollars. According to the Tether release, Freeh Sporkin & Sullivan, LLP (FSS), confirmed that all Tethers (USDT) in circulation are sufficiently backed by U.S. dollar (USD) reserves.

The FSS report, based on a random date balance inspection and a full review of relevant bank account documentation, confirms that all Tethers in circulation as of June 1, 2018 are fully backed by existing USD reserves.  

Quoted by Bloomberg, Tether CEO Jan Ludovicus van der Velde said that "despite speculation, we have consistently stated that Tether is backed by USD reserves at or exceeding the Tethers in circulation at a given moment, and we’re glad to have independent verification of this to answer some of the questions posed by the public."

“We are by no means done with our efforts to promote increased transparency at Tether. We are planning to build on this report moving forward and, despite the challenges of applying current accounting and assurance standards to cryptocurrency clients, we continue discuss these issues with potential audit partners.”

While Freeh Sporkin & Sullivan LLP didn’t conduct an official audit, they had access to Tether’s accounts at two banks for weeks and released data on how much money the company held on a single day, June 1, Tether’s general counsel said in an interview. That amount is nearly equal to the value of all Tether digital coins in circulation that day, $2.54 billion, according to Tether executives who spoke to the law firm.

Why not a full audit? “The bottom line is an audit cannot be obtained,” Stuart Hoegner, Tether’s general counsel, told Bloomberg  in a phone interview Tuesday. The cryptocurrency market looks too nascent for large accounting firms to consider taking on clients who offer digital coins, he added.

“The big four firms are anathema to that level of risk,” he said in the interview. “We’ve gone for what we think is the next best thing.”

In its report released Wednesday, FSS said it picked June 1 as the day to analyze without Tether’s knowledge. It was given online access to Tether’s bank accounts, statements and to employees at the financial institutions, Hoegner said, adding that he can’t name the two banks, in part due to privacy concerns. “Banking relationships are private,” and as a non-public firm Tether has no requirement to name them, he said.

Tether engaged the Washington, DC-based law firm in March to conduct an independent review of its bank account balances. The law firm was granted full access to all relevant bank and account documentation, and selected a random date for review without Tether’s knowledge or involvement. On that review date, FSS examined its bank balances and compared it to Tethers in circulation. FSS selected June 1, 2018 as its random review date, confirming that Tether’s bank balances totaled $2,545,067,236.82. On that date, there were $2,538,090,823.52 worth of USDTs in circulation. The report concludes that “FSS is confident that Tether’s unencumbered assets exceed the balance of fully-backed USD Tethers in circulation as of June 1st, 2018.”

Some questions remains: although FSS didn’t name the banks Tether is using, it did note that Eugene Sullivan, one of the law firm’s partners and a former federal judge, is on an advisory board for one of them. Its investigation also relied on phone and in-person interviews with Tether executives and bank representatives to reach its conclusions.

The law firm included several caveats to its findings. “FSS is not an accounting firm and did not perform the above review and confirmations using Generally Accepted Accounting Principles,” according to its report. “FSS has not performed any procedures or made any conclusions for activity prior to or subsequent to June 1st, 2018, Close of Business.”

The firm added: “FSS has assumed, without further inquiry, that the bank personnel providing the confirmations were duly authorized to provide such confirmations, and that the confirmations were correct.”

In response to the report, cryptos have seen a modest bounce:

The full report can be found here.

Published:6/20/2018 9:11:47 AM
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Published:6/20/2018 8:43:16 AM
[Markets] Watch Live: The World's Top 3 Central Bankers Discuss What's Next

European Central Bank President Mario Draghi, Fed Chairman Jerome Powell and Bank of Japan Governor Haruhiko Kuroda will appear on a policy panel Wednesday that's set to begin at 15:30 CET (that's 10:30 am ET). They will be joined by Philip Lowe, the Governor of the Reserve Bank of Australia. The panel is the last big event of the 2018 ECB annual forum on central banking, which was held in Sintra, Portugal and featured the theme "price and wage-setting in advanced economies."

Of course, there is likely to be disagreement among the 4 (or 3 big guys) as Kuroda remains pedal to the metal on his easing policies (despite the stealth tapering), Draghi has started to adjust to a tightening regime, and Powell is in full normalization mode.

All of which is ironic given that all three  face notable demises in their recent economic data...

 

Watch the panel live below:

Published:6/20/2018 8:43:16 AM
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Published:6/20/2018 8:11:31 AM
[Markets] Satellite Images Reveal Russia Upgrading Nuclear Bomb Storage At Kaliningrad

New satellite images appear to show Russia may have significantly modernized a nuclear weapons storage bunker and security system at a secret facility in Kaliningrad, a strategic enclave of Russian territory situated between Poland and the Baltics, as tensions between Moscow and Washington continue to escalate, according to a report from the Federation of American Scientists (FAS).

On Monday, the FAS published a brand new report revealing several satellite images detailing a significant renovation of what appears to be a buried active nuclear weapons storage bunker in Kaliningrad, about 50 kilometers (31 miles) from the Polish border.

“It has all the fingerprints of typical Russian nuclear weapons storage sites,” Hans Kristensen, the director of the Nuclear Information Project at Federation of American Scientists (FAS), said in a report.

“There is a heavy-duty external perimeter of multilayered fencing. The bunkers themselves have triple fencing around them as well. These are typical features from all the other nuclear weapons storage sites that we know about in Russia,” Kristensen explained.

FAS said the images confirm the renovations began at the site in 2016, when one of three underground bunkers was unearthed and strengthened before construction crews backfilled in early 2018, “presumably to return operational status soon.”

A buried nuclear weapons storage bunker in the Kaliningrad district has been under major renovation since mid-2016. (Source: Federation of American Scientists (FAS))

FAS indicates the site’s security system was previously upgraded between 2002 and 2010 when construction crews installed a heavily fortified security perimeter.

Between 2002 and 2010, the security perimeter around the Kulikovo nuclear weapons storage site were cleared and upgraded. (Source: Federation of American Scientists (FAS))

Kristensen said in the report that it was unclear from the satellite images if any nuclear weapons were currently being stored in the vaults of the bunker(s).

“The features of the site suggest it could potentially serve Russian Air Force or Navy dual-capable forces.

But it could also be a joint site, potentially servicing nuclear warheads for both Air Force, Navy, Army, air-defense, and coastal defense forces in the region,” Kristensen wrote.

“It is to my knowledge the only nuclear weapons storage site in the Kaliningrad region,” Kristensen added.

Moscow has yet to comment on the modernization reports of its nuclear storage site in Kaliningrad, but did mention in 2016 that it deployed nuclear-capable Iskander missiles to the region.

And now the underground bunker to securely store nuclear warheads makes sense.

Piecing together the puzzle, Russia could soon deploy quick reaction readiness forces at this facilities, in case, there was a crisis, where teams could retrieve the warheads from the underground bunker/vaults and quickly mount the warheads on the Iskander missiles.

Kristensen said that Moscow maintained its secret stash of nuclear warheads in “central” storage believed to be hiding somewhere in mainland Russia. He suggested that the facility in Kaliningrad “could potentially function as a forward storage site that would be supplied with warheads from central storage sites in a crisis.”

In February, North Atlantic Treaty Organization (NATO) officials expressed concern that Russia recently deployed new missiles to Kaliningrad. A US defense official based in Europe said Moscow’s recent deployment of its Iskander missiles to the region was “the biggest move we’ve seen” regarding Russia’s militarization of the Baltics.

For years, NATO has demanded Moscow to withdraw its nuclear warheads and nuclear-capable missiles from NATO borders.

While NATO forces have surrounded Kaliningrad, in the heart of NATO territory, it seems as Moscow is in the final stages of installing a nuclear deterrence for the region.

What could go wrong? NATO and Russia are armed to kingdom come.

Published:6/20/2018 8:11:31 AM
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Published:6/20/2018 7:41:39 AM
[Markets] Risk Happens Fast

Authored by Doug Kass via RealInvestmentAdvice.com,

  • We remain in a trading sardine market – not an eating sardine market

  • Hastily crafted policy that conflates politics is dangerous in a flat and networked world

  • The return of an untethered Orange Swan is market unfriendly … brace yourselves

  • The Supreme Tweeter will likely “Make Uncertainty and Volatility Great Again” (#MUVGA)

The First Half of 2018

The first half of 2018 has been a tale of two markets. Maybe three markets.

January brought a market fervor – in which global equities rose dramatically, likely in response to the expected stimulative contribution and impact of the Administration’s reduction in statutory tax rates.

As interest rates began to climb in January, bullish investor sentiment crested and the risk parity trade went array.

Stocks fell violently in February and the new regime of volatility commenced – in a market revealed as increasingly illiquid.

The S&P Index fell from nearly 2900 and successfully tested the 2550 level twice. Several meek rallies commenced but the S&P had 2-3 more successful tests at about 2600 and stocks recently closed in on 2800 (S&P Index).

1Q-2018 corporate revenues and profits didn’t disappoint but the complexion of the market had clearly changed – and valuations (the S&P Index’s price earnings ratio expanded by almost 3 points in 2017) began to contract. Wall Street, which outperformed Main Street in 2017 – reversed roles in the first six months of 2018.

While the stock market reeled with volatility since January 1, the FAANG stocks generally stood tall throughout the year as the market narrowed and investor interest focused on the 5-10 anointed stocks.

The first half of 2018 was also characterized by a series of questionable and controversial presidential policies (the most recent being trade/tariff decisions) at the same time the Federal Reserve was pivoting on monetary policy. By overtly playing to his base, having little sense of economic history, Trump has contributed to even greater volatility in a market without memory from day to day.

Finally, during the second quarter the European Union’s economic instability and weak banking foundation (read: Deutsche Bank (DB) ) contributed further to the new regime of volatility.

Despite these intrusions - up until a week ago - stocks climbed steadily higher. I shorted into that rise.

Since my marshalling assignment at the US Open at Shinnecock, the markets have declined for six consecutive trading sessions. (It also has been a bad time for six others: Jordan Spieth, Rory McIlroy, Phil Mickelson, Tiger Woods, Jon Rahm and Jason Day).

Trade War

President Trump’s aggressive negotiating strategies with regard to trade is a crude tool and is clearly disruptive and destabilizing to the markets. That policy and those negotiating tactics hold the risk that business confidence could be jeopardized and supply chains may be disrupted.

In turn, the real economy is vulnerable.

The Administration is trying to get a “better deal” for America but the way to get a better deal is to make us more competitive and the Trump strategy, rooted in the past and not the present, is not the way to do it.

The Second Half of 2018

My concerns are multiple over the balance of the year:

  • The possibilities of policy errors (fiscal and monetary) are multiplying.

  • The Fed is tightening. If the global economic foundation is as weak as I believe, our central bank may go too far in raising rates.

  • A poorly and hastily crafted trade policy, though not having a large direct impact on the domestic economy, could deliver a big psychological drain to business confidence.

  • In a flat and interconnected world economy, global cooperation is at an all time low.

  • The corporate tax reduction will likely trickle up and not down.

  • Debt is out of control and politicians are paralyzed.

  • Both the Democrats and Republicans are guilty of fiscal irresponsibility. With rates rising, ‘the judgment day” is nearing.

  • With over $50 trillion in non financial domestic debt, every 100 basis point increase in rates produces a $500 billion economic drag.

  • The Global Citigroup Economic Surprise Index is weakening (even China is slowing) — worldwide growth is becoming more ambiguous, less steady and less reliable.

  • Short dated Treasuries now yield more than the S&P dividend yield.

  • The yield curve continues to flatten – underscoring the fragility of domestic economic growth.

  • Technicals are deteriorating: (1) The market is narrowing (see my repost of Bob Farrell’s Ten Rules of Investing), (2) New highs are contracting, new lows are expanding, and (3) Valuations of the median stock on the NYSE is already contracting. More contraction may lie ahead.

  • The markets are growing more illiquid and with so many market participants worshiping at the altar of price momentum – market structure is a risk (with so many on one side of the boat).

  • With strength in the US dollar and emerging weakness in the EU and elsewhere, US denominated debt concerns could continue to raise issues regarding the emerging markets.

I have long argued, in my 15 Surprises for 2017 and for 2018 and in my Diary, that the “Orange Swan” would ultimately be market unfriendly – that an untethered Trump would “Make Uncertainty and Volatility (in the markets) Great Again.” (#MUVGA)

And, I have recently argued over the last few months, that the President’s behavior is now beginning to impact the capital markets.

Acting upon his impulses, growing more isolated and becoming more unhinged — the Supreme Tweeter is now an Orange Swan headwind. In my view, this is market unfriendly and one of the reasons the markets may continue to act poorly.

Past is indeed prologue as Trump’s White House is now replicating The Trump Organization – both are built on a small body of personnel with policy developed on “gut instincts” (and without thoughtful planning). We witnessed this during the campaign and we now see it in the government of the U.S.

As I wrote in “A Presidency of One” a few months ago:

  • Trump’s behavior may finally matter to the capital markets
  • The Administration’s disorganization, revolving door and impulsive policy actions may soon intersect with market valuations
  • Investors should consider taking C.I.T.A. (“cash is the alternative”) to the prom and should consider avoiding a dance with T.I.N.A. (“there is no alternative”)

“Rex, eat your salad…” – President Trump

Since 2017 year-end, the White House has been a poster child of turnover and disorganization.

After the recent multiple changes (of senior government officials) in the first months of this year, impulsive policy decisions/statements, the lack of shared policy conviction, a seeming Administration agenda of fear (rather than hope) and given potential legal problems, the President has likely seriously cut off his ability to hire capable people for White House assignments.

Without counsel, the President’s decision making process poses a threat to the markets.

Nowhere is it as clear as in the trade tariffs being levied towards China and other nations.

Meanwhile, the sounds and pictures of recent immigration policy grow move vivid and a potential Blue Wave may loom only four months from now – creating the potential for even more uncertainty. It is looking increasing likely that the November mid-term elections could result in important changes in the majorities and point to the increased likelihood that little meaningful legislation may be forthcoming over the balance of the Trump Presidency. As I put it in my Surprise #1 in my 15 Surprises for 2018:

Surprise #1: President Trump’s Behavior Finally Does Matter

“The tax reform bill becomes the sole landmark piece of legislation of his presidency.”

It took a while but I believe the weight of the Trump Administration has now become an influence on the markets (but not in a good way) – as also carved out in my 15 Surprises for 2018:

Surprise #2: Politics is Upended in 2018 as the U.S. Electorate Pushes Left in Mid-Term Elections

  • The tax cut for the rich is election manna for the Democrats.

  • The U.S. economy falters next year, more due to monetary tightening, but everyone blames Trump and the ineffective tax reform initiatives put in place in late 2017 that do little to encourage capital expenditures and feather the bed of corporate executives.

  • With a malfunctioning and disorganized administration, almost nothing gets done in Washington, D.C.

  • The House falls to the Democrats in the November mid-term election, but the Senate remains barely (by one seat) in control of the Republicans.

  • Establishment Republicans — seeing an intermediate and longer-term threat because of large losses in voters who are minorities, females and those under age 35 — panic and begin to reconstitute the party’s leadership toward a more youthful profile and try to expand the party’s tent in order to survive the reduced support seen for the Trump administration.

  • House Speaker Paul Ryan, recognizing the need for party change, resigns.

Bottom Line

* Price momentum and hope float but fundamentals propel.” – Kass Diary

My S&P forecast remains unchanged:

Market Downside: 2400 to 2450 
‘Fair Market Value’: 2500 
Trading Range: 2550- 2750 to 2800 
Monday Close: 2775

So, according to my calculus, downside risk remains far greater than upside reward and I remain net short.

The market’s reaction to news over the last few months indicates that there is not a lot of conviction out there.
While I remain concerned about the monetary pivot of the world’s central bankers, higher interest rates, fiscal irresponsibility (on both sides of the political pew), too optimistic consensus on corporate profits and domestic economic growth, a potential trade war with China, and other possible headwinds – the Presidency (and his actions) will now likely continue to weigh on the markets (and on the Republican Party over the balance of the year).

When we superimpose the market structure (with so many in one side of the investment boat), the secondary market implication of all this is a continuation of a new regime of heightened volatility and a wide trading range – which favors trading sardines over eating sardines.

Moreover, if we are 12-18 months from a recession – we will blow out our deficit to more than $1.5 trillion – which I can’t imagine the bond market will like very much.

Finally, I don’t see, given the above concerns, that the FAANG stock price rises are sustainable. I feel like a lot of people are waiting for the moment to jump off the train – it could be a hard fall.

Investors should consider taking C.I.T.A. (“cash is the alternative”) to the prom and should consider avoiding a dance with T.I.N.A. (“there is no alternative”).

Published:6/20/2018 7:41:39 AM
[Markets] Border DNA Tests: Sessions Proposes Genetic Testing To Determine Biological Relationship Vs. Human Trafficking

Attorney General Jeff Sessions has been talking to members of Congress about using DNA testing to verify whether children crossing the southern U.S. border are biologically related to adults they arrive with, or if they are being smuggled into the country by human traffickers, Tony Perkins, President of the Family Research Council.

“Sessions is talking to congressional members and is hoping for a legislative fix,” Perkins said, adding that the DOJ would like to see “just, fair and enforceable” immigration policies. To that end, “They are looking at how to use DNA tests in the field to verify they are parents and not traffickers," according to Perkins.

“The reality is if American parents put their kids through what these immigrant parents have done to their kids, they would be charged with child abuse.” -Tony Perkins

Sessions told Perkins “We know for a fact that a lot of adults taking children along are not related to them. [They] could be smugglers. They could be human traffickers. It’s a very unhealthy dangerous thing and it needs to end. We need to return to a good lawful system,” Sessions told Perkins on his broadcast.

During a Monday evening White House news conference, Department of Homeland Security Secretary Kirstjen Nielsen countered claims that the Trump administration is separating all children from their parents following an apprehension at the border - noting that "The vast majority, vast vast majority of children who are in the care of HHS right now — 10,000 of the 12,000 — were sent here alone by their parents."

"That’s when they were separated. So somehow we’ve conflated everything. But there’s two separate issues. 10,000 of those currently in custody were sent by their parents with strangers undertake a completely dangerous and deadly travel alone."

On Tuesday, President Trump echoed Nielsen's statistics over Twitter:

In other words - 80% of migrant children are separated from their parents when those parents choose to send them across the border alone or with human traffickers. 

During a Tuesday address at the National Federation of Independent Business (NFIB), Trump suggested that his administration's "zero tolerance" policy is simply enforcing legislation created and enacted under previous administrations - and said "I don't want children taken away from parents." 

As for collecting DNA, we can only hope that this is not just another government ploy to build a giant DNA database which starts the "normalization" of mass DNA collection while digital privacy rights and data security are woefully lacking. 

Published:6/20/2018 7:11:22 AM
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Published:6/20/2018 6:43:23 AM
[Markets] Canada Becomes Second Country To Legalize Weed

Canada is on track to become the first G-7 nation to legalize marijuana, and the second country in the world (after Uruguay), after its Senate approved legislation in a 52-29 vote, paving the way for recreational cannabis to be legally bought and sold within the next few months.

The vote clears the way for the government in Ottawa to take the final step: The ceremonial approval of by the governor-general that would make Bill C-45 law. Still, not all of the details have been ironed out. For example, the date for when the law would take effect remains unclear. And lawmakers have said it will take a few months for producers and retail stores to stock up and get ready for legal sales to begin, according to Bloomberg.

Canada

Possession of Cannabis became a crime in Canada way back in 1923, but it has been legal for medicinal purposes since 2001. Yet despite the culture's longstanding permissiveness when it comes to marijuana, some groups objected to the law, including conservative politicians and indigenous groups who felt they hadn't been consulted about the bill. But their resistance wasn't enough to scuttle the law, and by mid-September, Canadians will be able to buy cannabis and certain cannabis products at retail shops - though cannabis edibles will not be available for purchase for another year because the government says it needs time to decide on appropriate regulations. Meanwhile, adults will be allowed to possess one ounce of the stuff in public, according to the BBC.

Even after the law takes effect, it will still be illegal to possess over 30 grams of cannabis, grow more than four plants per household and to buy it from an unlicensed dealer. Marijuana is legal for medicinal purposes in 14 European countries, Israel, Argentina, Puerto Rico, Panama, Mexico, Turkey, Zambia and Zimbabwe. In the US, medicinal marijuana is allowed in 29 states, and the District of Columbia. In addition, nine states have legalized it for purchase. Spain, the Netherlands, Portugal, Slovenia, Jamaica, Chile, Peru, Colombia, Ecuador, Luxembourg and some parts of India have all decriminalized the drug for personal use.

Canadian Prime Minister Justin Trudeau celebrated the vote as a victory for the government, which will "reap the profits" of marijuana legalization, he said in a tweet.

Trudeau's liberal party introduced the bill last year in a bid to make Canada the second country in the world after Uruguay to legalize marijuana for recreational use, according to the Guardian. Analysts estimate that sales of cannabis could amount to between C$5 billion and C$7 billion annually. Sales systems will vary between provinces: In New Brunswick, marijuana will only be available at a state-run chain called CannabisNB. The minimum age to consume it will vary between 18 and 19, depending on the province.

One government spokesman insisted that the government had been prudent in its approach and that it has made it clear that "it's not party time."

On Tuesday, supporters of the legislation stressed the cautious, prudent approach to the landmark change. "What the government’s approach has been is, yes, legalisation but also strict control," said Peter Harder, the government’s representative in the Senate. "That does not in any way suggest that it’s now party time."

Canada will now explore the idea of clearing all criminal convictions for simple possession, and is also pressuring the US to drop a policy that prevents Canadians who admit to having smoked marijuana from traveling to the US.

Published:6/20/2018 6:43:23 AM
[Markets] Global Markets, US Futures Rebound As Trade War Panic Fades

After 6 consecutive declines in the Dow Jones, the longest stretch since March 2017, and erasing all of 2018’s gains, the cash index is finally set for a rebound, trading some 130 points higher in the premarket, as trade war panic fades for now (even if the list of what can go wrong next is long). As a result, the market snapshot this morning is a sea of green...

... with S&P futures trading near session highs.

More Dow strength was assured after yesterday's decision to replace Dow Jones stalwart General Electric with Walgreens, even if the expulsion of the "last true industrial" stock was not that surprising in light of its collapsing performance...

... and 51% drop in EPS over the past year.

Source: @Schuldensuehner

With lack of new trade war rumblings, traders were quick to add to risk around the globe, and European stocks also rose adding to momentum from Asia, as the panic surrounding a potential global trade war showed signs of easing. The European rally was broad-based with every sector advancing in the Stoxx Europe 600 Index, which jumped following three days of losses.

Earlier in Asia, shares in Japan and China both reversed declines, even though the Shanghai Composite Index was unable to rebound above the 3,000 level it fell through on Tuesday. The Shanghai Composite gained 0.5%, the most since June 12, after falling as much as 1.2% in morning; Shenzhen Composite Index likewise advanced 1.4% higher, while Hong Kong’s Hang Seng Index added 1.4%, and the Hang Seng China Enterprises Index +0.9%. Consumer staples and health-care stocks lead gains in both markets; firms’ reliance on domestic market makes them largely immune to a China-U.S. trade war.

China's 10-year treasury futures dived near 0.5%, the biggest drop this month, due to profit-taking amid improving risk sentiment. It surged 0.4% on Tuesday as China’s stock market crashed.

Source: @YuanTalks

There were some fireworks in FX trading, where the euro whipsawed as the market’s knee-jerk reaction to comments by ECB policymakers came amid otherwise muted flows. Ahead of the ECB's Sintra conference conclusion later today, the EUR briefly erased an early loss after Bank of France Governor Francois Villeroy de Galhau said in a letter released Wednesday that the first ECB interest-rate rise “could come as of the summer of 2019.” Villeroy later specified that his comments were in line with the Governing Council’s rate guidance issued after its June 14 meeting.

The Euro then sharply tumbled to a 1.1537 day low after Governing Council member Ewald Nowotny highlighted that monetary policy divergence is helping to weaken the currency against the dollar, and that the ECB's slow policy normalization is fueling the common currency’s weakness against the dollar, suggesting that it was the ECB's purpose to weaken the EUR. This is what Nowotny said:

"What we also see, is that we have a development of the exchange rate that’s leading to a significant weakening of the exchange rate against the dollar. That’s surely primarily a development of the interest-rate policy, where the ECB wants to keep its rates on hold at least until summer of next year, while the U.S. has announced rate hikes, so that the difference between European and U.S. rates becomes stronger." 

The EURUSD then subsequently steadied near 1.1560 as options-related bids above 1.1500 kept absorbing selling pressure while offers according to three traders quoted by Bloomberg.

Elsewhere, the onshore yuan jumped after the People’s Bank of China set its daily reference rate at a stronger level than all analyst and trader projections.

Separately, the Bloomberg Dollar Index reversed earlier Asian-session losses following buying after the London open, and was fractionally higher on Wednesday. Part of the dollar strength came from a weakening pound ahead of a second vote on whether the U.K. Parliament should get a say on what happens if there’s no deal at the end of the Brexit talks with the EU. Sterling dropped 0.2% to touch 1.3148, a fresh seven-month low. As Bloomberg explains, if the House of Commons decides in favor of Parliament having a “meaningful vote” it could have an impact on Prime Minister Theresa May’s political future and the path Brexit negotiations take.

The relative calm spread to emerging markets, which had been hit hard in recent weeks, but developing-nation risk assets rose on Wednesday, paring their plunge a day earlier. And while there were no major outliers in the FX space, Turkey’s lira fell again, before an election this weekend.

US Treasury yields were unchanged at 2.896%. Germany’s 10Y yield rose less than 1bp to 0.38%, the first advance in more than a week, while Britain’s 10Y Gilt yield also gained 1 bp to 1.283%, also its first advance in a week. Meanwhile, Italian 10-year yields dropped 2 bps to 2.535%, the lowest in almost four weeks.

Commodities are trading mixed with oil extending gains as energy ministers emerge ahead of the key OPEC+ meeting later this week. WTI reclaimed the USD 65/bbl overnight, and is now eyeing USD 65.50/bbl while Brent trades north of USD 75.50/bbl. Yesterday’s API inventories printed a larger than expected draw, in which energy prices gradually edged higher in the aftermath. In terms of comments, the Russian Deputy Energy Minister expressed the country is ready to talk about all OPEC+ proposals and they expect to reach an agreement in terms of an ease in output cuts by June 23rd, while the Nigerian Energy Minister stated all options are on the table, however it is too early to tell if they will support a hike in production. An Iranian official said Iran will only accept production increases to push compliance to 100% on the condition that producers stick to their quotas. Elsewhere, oil output in Libya dropped to 700k BPD from just over 1mln BPD amid conflict in the region.

Moving onto the metals complex, gold (-0.3%) trades lower on the day, subdued by a firmer dollar. London copper futures bounced off 3-week lows following a near-2% loss during Tuesday’s session although escalating trade tensions cap any recovery in risk appetite. Elsewhere, iron ore futures trimmed losses amid a 5% drop in Chinese iron ore outputs for May while Shanghai steel rebounds after slumping nearly 3% in yesterday’s session.

On today's calendar, expected data include MBA mortgage applications, current account, and existing home sales. Micron and Actuant are among companies reporting earnings. ECB President Draghi, Fed Chair Jerome Powell, RBA Governor Philip Lowe take part in a policy panel in Sintra, Portugal.

Market Snapshot

  • S&P 500 futures up 0.3% to 2,775.50
  • STOXX Europe 600 up 0.7% to 385.78
  • MXAP up 0.6% to 169.70
  • MXAPJ up 0.7% to 552.15
  • Nikkei up 1.2% to 22,555.43
  • Topix up 0.5% to 1,752.75
  • Hang Seng Index up 0.8% to 29,696.17
  • Shanghai Composite up 0.3% to 2,915.73
  • Sensex up 0.5% to 35,476.49
  • Australia S&P/ASX 200 up 1.2% to 6,172.58
  • Kospi up 1% to 2,363.91
  • German 10Y yield rose 0.9 bps to 0.382%
  • Euro down 0.3% to $1.1560
  • Italian 10Y yield rose 0.3 bps to 2.292%
  • Spanish 10Y yield fell 1.2 bps to 1.229%
  • Brent futures up 0.4% to $75.41/bbl
  • Gold spot down 0.1% to $1,273.00
  • U.S. Dollar Index up 0.2% to 95.20

Top Overnight News from Bloomberg

  • The U.S. economy is booming this quarter as tax cuts power consumers and businesses. Yet risks are mounting that the high will be short-lived
  • China’s direct investment in the U.S. slumped in the first half of this year, amid deteriorating economic relations between the two nations, according to research firm Rhodium Group LLC
  • The European Union is on course to hand dozens of U.K.-based companies a pre-Brexit tax bombshell, according to people familiar with a state-aid probe that could lead to bills exceeding 1 billion pounds ($1.3 billion)
  • The gap between real barrels and those that exist only on paper means that the impact on the market of any agreement between the OPEC and its allies to increase supply is likely to be about one-third smaller than the headline announcement, according to Bloomberg calculations
  • Iran put itself on a collision course with Saudi Arabia at this week’s OPEC meeting, rejecting a potential compromise that would allow a small oil-production increase to appease energy consumers

Asia stocks traded mixed as the region attempted to compose itself from the prior day’s sell-off and after some late reprieve on Wall St. where the majors still finished negative but well off worst levels, aside from the DJIA which underperformed as industrials and materials suffered the brunt of the heightened trade tensions. ASX 200 (+1.0%) was the biggest gainer and reached its highest intraday level in a decade with upside led by its largest weighted financials sector, while Nikkei 225 (+0.6%) traded indecisive and at the whim of a choppy currency. Hang Seng (+0.3%) swung between gains and losses, while Shanghai Comp. (-0.6%) remained downbeat on the tariff-threat overhang. Finally, 10yr JGBs are marginally lower with demand sapped by the improved picture in the region, although downside was also limited amid the indecision throughout most of the session in Japan and with the BoJ present in the market for JPY 690bln of JGBs in the belly to super-long end.

Top Asian News

  • Thailand Bucks Southeast Asia Trend by Keeping Rates on Hold
  • Ackman-Backed Platform Is Said to Discuss Unit Sale With UPL
  • Goldman Sachs Hires Veteran Dealmaker for China Investment Bank
  • China’s Investment in the U.S. Is Collapsing as Trade War Flares
  • China Stocks Bear Market to Last Next 12 Months: Morgan Stanley

European equities are recovering some of the losses seen yesterday as trade war news flow slows. The FTSE 100 is the outperforming bourse, coming off of month lows hit in Tuesday’s trade, as the GBPUSD extends losses at 6 month lows. The DAX is currently underperforming, with automotive names hit (Continental (-0.6%), Daimler (-0.5%)).Volkswagen (+0.8%) is bucking the trend, however, following an announcement of a possible alliance with Ford to develop and make transporter vans as according to sources. Imperial Brand’s (+3.0%) naming as a top pick at Liberum has pushed the co. to the top of the FTSE 100. Dialog Semiconductor (+2.2%) confirmed it is in discussions on a potential acquisition of Synaptics and is to proceed with due diligence.

Top European News

  • U.K. Companies Said to Face Pre-Brexit Tax Bombshell From EU
  • Nowotny Says Euro Weakening on Fed-ECB Policy Path Differences
  • The Macron-Merkel Euro Plan Is Released. Here’s How It Stacks Up; Franco-German Plan Adds to Pressure on Banks to Tackle Bad Debt
  • Ferragamo Plunges After Controlling Family Sells Shares

Commodities are trading mixed with oil extending gains as energy ministers emerge ahead of the key OPEC+ meeting later this week. WTI reclaimed the USD 65/bbl overnight, and is now eyeing USD 65.50/bbl while Brent trades north of USD 75.50/bbl. Yesterday’s API inventories printed a larger than expected draw, in which energy prices gradually edged higher in the aftermath.  In terms of comments, the Russian Deputy Energy Minister expressed the country is ready to talk about all OPEC+ proposals and they expect to reach an agreement in terms of an ease in output cuts by June 23rd, while the Nigerian Energy Minister stated all options are on the table, however it is too early to tell if they will support a hike in production. An Iranian official said Iran will only accept production increases to push compliance to 100% on the condition that producers stick to their quotas. Elsewhere, oil output in Libya dropped to 700k BPD from just over 1mln BPD amid conflict in the region. Moving onto the metals complex, gold (-0.3%) trades lower on the day, subdued by a firmer dollar. London copper futures bounced off 3-week lows following a near-2% loss during Tuesday’s session although escalating trade tensions cap any recovery in risk appetite. Elsewhere, iron ore futures trimmed losses amid a 5% drop in Chinese iron ore outputs for May while Shanghai steel rebounds after slumping nearly 3% in yesterday’s session.

In currency markets, it was all eyes on the EUR which in contrast to broadly still waters elsewhere, some choppy price action on early ECB commentary from the Sintra symposium as the single currency rebounded further from Tuesday’s lows and towards 1.1600 vs the Usd on an apparent less dovish nuance from Villeroy vis-à-vis rate guidance (subsequently corrected to conform with consensus), but then retreated to sub-1.1540 when Nowotny noted Eur depreciation vs the Dollar on divergent interest rate policy. Technically, 1.1510 is still nearest support vs circa 1.1600 resistance and the 20DMA at 1.1686. CHF/JPY:  Both on the back foot vs a firm Greenback, as the DXY holds above 95.000 and risk sentiment overall stabilises, but with the Franc also increasingly wary about SNB intervention via Thursday’s policy meeting in the shape of NIRP and direct FX action should the Chf strengthen too much. Usd/Chf hovering above 0.9950 and Eur/Chf over 1.1500. Meanwhile, after largely irrelevant and rather dated BoJ minutes Usd/Jpy has bounced off yesterday’s base into a firmer range around 110.00, but perhaps capped by decent option expiry interest at and north of the big figure (around 2 bn from 110.00-05 and then between 110-40-50). GBP/CAD: Still hampered by Brexit and NAFTA uncertainty, with Cable struggling around a chart pivot at 1.3165, while the Loonie has extended losses vs its US counterpart to 1.3300+ and appears vulnerable or primed for a test of 12 month lows at 1.3348.

Looking at the day ahead, the ECB’s Villeroy, Knot, Lautenschlager and Coeure will speak at separate events while at Sintra there is a policy panel featuring President Draghi, Fed Chair Powell and BoJ Governor Kuroda. So expect lots of headlines. Away from that, Germany’s PPI for May, UK CBI selling prices data for June and May existing home sales in the US will be released. Elsewhere, the OPEC International Seminar is due to begin in Vienna.

US Event Calendar

  • 7am: MBA Mortgage Applications, prior -1.5%
  • 8:30am: Current Account Balance, est. $129.0b deficit, prior $128.2b deficit
  • 9:30am: Draghi, Powell, Kuroda and Lowe speak in Sintra, Portugal
  • 10am: Existing Home Sales, est. 5.52m, prior 5.46m; MoM, est. 1.1%, prior -2.5%

DB's Jim Reid concludes the overnight wrap

A quieter day at the World Cup yesterday but glancing at Russia vs Egypt last night reminded me of one of my favourite jokes. What do you call a young river in Egypt? Punchline at the end after the day ahead.

Not even an ancient Egyptian prophet could be expected to predict the exact path of this escalating trade war at the moment. The war of words are clearly worsening though and markets are starting to move towards pricing in this not being a short-term spat. It’s fair to say they have a long way further to fall if a compromise isn’t found, but we also have to try to work out what Mr Trump’s agenda and goal is. Is this a genuine crusade to get huge concessions from the Chinese or is he making a calculated gamble ahead of the mid-terms and will be happy to get relatively small last minute concessions that he can grandstand to voters? The problem with the latter outcome is that we have 4 and half months until voters go to the polls and thus plenty of potential uncertainty. Maybe Mr Trump is a master tactician as the tax cut does give the US economy and equity markets enough strength for him to be able to avoid blinking for now. For someone that focuses on equity markets like Mr Trump, the S&P 500 is still up +3.33% in 2018 (DOW went negative YTD again yesterday though) and outperforming virtually every other main global equity market. With Chinese equities down -3.5% to -5.8% yesterday and down c0.5% this morning, his actions are creating more issues for others than himself on a relative basis at the moment. Until the pain in US markets is higher, then he may carry on with his current tactics.

The negative trade rhetoric continued after we went to print yesterday. President Trump told the National Federation of Independent business that “we’ve got to do something about it….we’re going to make it fair”. Meanwhile, White House adviser Navarro said “China does have much more to lose than we do” and that “China may have underestimated the strong resolve of President Trump”. On the other side, China’s PBOC sought to calm market sentiment as it indicated the central bank was prepared for outside shocks and “we’ll be forward-looking, prepare relevant policies and comprehensively use all kinds of monetary policy tools”. Meanwhile, Governor Yi also said China “has room to face all sorts of trade friction”.

This morning in Asia, markets are broadly higher with the Kospi (+1.03%), Nikkei (+0.56%) and Hang Seng (+0.41%) modestly up while Chinese bourses are down 0.1% to 0.6% as we type. Meanwhile China’s Yuan is slightly stronger vs. the dollar for the first time in three days (+0.10%) while futures on the S&P are marginally up. Elsewhere onto the latest BOJ minutes, most members said it was appropriate to stop providing the projected timing on when the 2% inflation target will be achieved. Members also agreed that even if the projected timing was reviewed in the latest meeting, the Bank’s monetary policy stance would not change at all.

Turning back to trade tensions and its potential impacts, DB’s Zhiwei Zhang and team have updated their analysis and estimate that if the trade war escalates to include US$200bn of Chinese exports at a tariff rate of 10%, it would have a meaningful impact on both sides, with the cumulative impact on China’s GDP growth at 0.2-0.3ppt (this includes the 25% tariff on the first $50bn of exports). The products affected would likely include consumer goods, which the US government has so far been carefully trying to avoid hitting. Notably, the big question on our economists’ mind is whether China will move beyond trade and target US business interests in China. The team estimate that US firms sold US$448bn worth of goods and services to China in 2017, with c37% through trade and c63% ($280bn) through local operations by US subsidiaries in China. Overall, China has not threatened officially to target US firms in China, but it’s one to watch and a risk that our economists see as rising as trade tensions build.

Our US economists’ base case remains that the trade conflict with China will be settled before it progresses significantly beyond the initial imposition of tariffs on $50bn of imports in both directions. However, recent events have clearly increased the risks that the conflict will begin to have measurable negative economic effects. If things deteriorate further, there is the possibility of a stock market correction in the -5% to -10% range, although if a settlement is then negotiated quickly, equities could recover and the risks to GDP mitigated. However, if a trade war gathers further momentum, it could well induce the next recession.

As for markets yesterday, risk assets sold off while core bonds and the Yen firmed as the US / China trade tensions intensified. China’s Shanghai. Comp. dropped -3.78% to a two year low, while European bourses also weakened, with the export biased DAX (-1.22%) leading the decline. That said, the Stoxx 600 (-0.70%) and S&P (-0.40%) was relatively resilient, as the latter staged a steady recovery throughout the day while the domestically focused small- cap Russell 2000 index edged up +0.06%. Within the S&P, materials and industrials stocks that are more exposed to a potential trade war with China underperformed (GM -3.9%; Boeing -3.8%; Caterpillar -3.6%), while telco, health care and utilities stocks all advanced. Meanwhile the VIX rose for the second straight day (+8.5% to 13.35).

Government bonds firmed on the back of flight to safety and continued dovish commentaries from the ECB. 10y yields on US treasuries fell as much as 6.6bp intraday before closing -2bp lower at 2.897%, while Bunds (-2.6bp), OATs (-2.1bp) and Gilts (-4.1bp) were also in demand. The US 2s10s spread has nudged 1.5bp lower yesterday to a fresh post GFC low of 35.2bp. In Europe, Mr Draghi seemed to reinforce the ECB’s dovish stance as he noted “we’ll remain patient in determining the timing of the first rate rise and will take a gradual approach to adjusting policy thereafter”. He added that “the path of very short-term interest rates that is implicit in the term structure of today’s money-market interest rates broadly reflects these principles”. Meanwhile, the ECB’s Liikanen took a step further and added that the ECB can hold rates steady even after summer 2019 “if necessary”.

In commodities, soybeans fell to a fresh c2 year low (-2.20%) while wheat (-2.39%) and base metals (Copper -1.07%; Zinc -0.89%; Aluminium -1.12%) retreated on higher trade tensions. WTI oil also traded lower ahead of this Friday’s OPEC meeting (-1.18%). Over in FX, the US dollar index firmed for the first time in three days (+0.27%) while the Euro and Sterling fell -0.28% and -0.54% respectively.

Away from the markets and onto “a new chapter” for the EU as termed by Germany’s Merkel. After her meeting with French President Macron, Chancellor Merkel said Germany and France has agreed to cooperate to reform the EU’s asylum system as we both “understand the topic of migration is a joint task” and “our goal remains a European answer to the challenge”. Elsewhere, the two leaders agreed to an in principle plan to strengthen the Euro area, including setting up a euro-area budget and a crisis backstop under the ESM (European stability mechanism). Overall, Ms Merkel summed it up as “an important step for Europe….we can say we’ve taken a small step along the road”. Meanwhile Mr  Macron suggested the proposal will be presented to other countries, with specifics to be worked out later this year and the plans to take effect from 2021. Staying with Europe, today sees a key Brexit vote in the U.K. House of  Commons and again covers how much say parliament should have on the final deal or if negotiations break down. If the Government loses it could have major implications for PM May so one to watch.

Before we take a look at today’s calendar, we wrap up with other data releases from yesterday. In the US, the May housing starts rebounded more than expected, up 5% mom to 1.35m (vs. 1.31m expected). Conversely, housing permits fell more than expected at -4.6% mom to 1.30m (vs. 1.35m), but annual growth is still up 8% yoy and broadly in line with growth in recent months. In Europe, the ECB’s April current account surplus was narrower than last month at €28.4bn (vs. €32.8bn previous), but still lifted the 12-month running surplus to a new high of €410bn.

Looking at the day ahead, the ECB’s Villeroy, Knot, Lautenschlager and Coeure will speak at separate events while at Sintra there is a policy panel featuring President Draghi, Fed Chair Powell and BoJ Governor Kuroda. So expect lots of headlines. Away from that, Germany’s PPI for May, UK CBI selling prices data for June and May existing home sales in the US will be released. Elsewhere, the OPEC International Seminar is due to begin in Vienna.

...........Juvenile.

Published:6/20/2018 6:12:58 AM
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Published:6/20/2018 5:41:21 AM
[Markets] "Mr. President Fu*k You!": Police Search For Congress Intern Who Heckled Trump

President Trump as he arrived at the Capitol Tuesday to meet with House Speaker Paul Ryan (R-WI), when a woman thought to be a Congressional intern shouted "Mr. President, Fuck You!" as he walked down the hall. 

The incident occurred as tempers flared in D.C. over President Trump's "zero tolerance" immigration policy of enforcing existing laws, which include separating children from their parents who choose to enter the United States illegally - something done under both Bush II and Obama

All 49 members of the Democratic caucus - including independents Bernie Sanders (VT) and Angus King (ME), signed on to Monday legislation designed to prevent the separation of immigrant families - something President Trump agrees with:

Trump also noted that 80% of migrant children are unaccompanied - meaning they were "separated" from their families when their parents chose to send them with human traffickers to America. 

Perhaps sensing an opportunity to hobble Trump on the separated children thing - former First Ladies Laura Bush and Michelle Obama joined together to criticize the "zero tolerance" policies - which many on Twitter immediately noted were passed into law and enacted by their husbands. 

As for Trump's heckler, we expect she will be fired, only to promptly re-emerge as the newest leader of the #resistance.

Published:6/20/2018 5:11:01 AM
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Published:6/20/2018 5:11:01 AM
[Markets] Russia Warns: Increased US Marine Corps Presence In Norway Could Be Viewed As An Attack

Russia is hinting that a new wave of U.S. Marines in Norway, near the Russian border in the Troms region, could be viewed as an attack, the MarineTimes reported.

Last week, the Russian Embassy in Norway warned of consequences for the latest U.S. troop buildup, and on Friday, Foreign Ministry spokesperson Maria Zakharova criticized Norway for its expanded military cooperation with Washington.

A Marine with Marine Rotational Force-Europe 18.1 sends live rounds down range while conducting a squad attack during winter warfare training at Haltdalen Training Center, Norway, April 18, 2018. (Gunnery Sgt. Clinton Firstbrook/Marine Corps/MarineTimes)

According to Zakharova, the policy of the Norwegian government to support a doubling of Marines “in the country and deploy them near the border with Russia undermines mutual confidence.” Furthermore, she argues, the Marines’ presence in the Arctic country — a few hundred miles from the Russian border, in fact, could be an attack.

The statements come as the Norwegian government intends to add another 400 U.S. Marines to Norway before the most significant military exercise since the Cold War this fall.

However, the Marines are not permanently stationed in the country, only on a “rotational deployment,” the Norwegian defense ministry recently stressed.

“We paid attention to the reports of the Norwegian Ministry of Defense released on June 13, which contain Oslo’s agreement to double the US Marine Corps stationed on the Norwegian territory from 330 to 700 people, prolong their rotation presence there for five years, expand its footprint to the north, closer to the border with our country, and create infrastructure for warplanes at the expense of the US under the implementation of the so-called European initiative to deter Russia,” Zakharova said.

“We believe that such decisions undermine the traditional Norwegian policy of non-deployment on its territory of foreign military bases in peacetime on a permanent basis. It is clear that the actions of the current Norwegian authorities undermine confidence and predictability in bilateral relations and run counter to the earlier given pledges on the rejection of policy with aggressive goals.”

The Russian Embassy of the United States points out on Facebook that “such actions run counter to the decision Norway made in 1949 not to allow foreign states to set up military bases on the country’s territory until Norway was under attack or threat of attack.” This could lead to “rising tensions and trigger an arms race, destabilizing the situation in northern Europe,” the embassy warned, adding that “we consider them to be clearly unfriendly so they cannot go without consequences.”

Zakharova reiterated that Norway’s officials repeatedly stated that Russia poses no threat to the country’s security. “Considering that the US Marine Corps is stationed on Norway’s territory, maybe the US attacked Norway?” she concluded. “We are calling on the Norwegian side to consider the Russian opinion on the developments in order to preserve the atmosphere of friendly neighborhood that has been developing for many years.”

The Russian Embassy in the United States claims that the Marines “presence will be continuous,” while troops will change every six months. The embassy added, “this is the way all military bases and even embassies operate.”

“We are particularly concerned that Oslo is implementing these plans when there is neither substantive political dialogue nor meaningful contact between the [Russian and Norwegian] militaries, as Norway has been avoiding contacts,” the Russian embassy said.

“We believe that European security must be equal and indivisible. It is only possible to ensure it if true national interests are pursued, while there is mutual respect and cooperation. The sooner Oslo comes to realize it the better,” the embassy added.

The Marine Corps has been sending a small rotational force of about 300 Marines to the Arctic country for extreme cold-weather training.

Speaking at the Naval War College last week, Commandant of the Marine Corps General. Robert B. Neller said the approval for additional Marines in Norway had cleared. Neller has been an advocate for sending Marines to extreme cold-weather environments for Arctic warfare training.

The Marines are currently on six-month rotations to Norway, where soldiers are preparing for cold-weather warfare to counter Russia.

According to the map below, Norway shares a 122-mile border with Russia and the Setermoen region, where the new force of Marines will be stationed, is roughly 250 miles from the border.

In the fall, Norway will host one of the largest-ever North Atlantic Treaty Organization (NATO) war drills, involving up to 35,000 participants.

Map detailing plans for upcoming military exercise: 

This is the calm before the storm. As we’ve mentioned before, NATO’s chess pieces are being positioned in Norway and surrounding regions before the largest military exercise since the Cold War this fall. It is becoming increasingly evident that a collision between NATO and Russia is on the horizon.

Published:6/20/2018 3:41:26 AM
[Markets] Russia Warns: "Militarization Of Space Is Way To Disaster"

President Trump's order for the Pentagon  to create a "Space Force" as a separate branch of the armed services has already elicited sharp criticism, but one Russian senator went as far as to warn that "the militarization of space is a way to disaster."

They also warned that Washington could risk violating key international agreements regulating the demilitarization of space, potentially destabilizing the international order.

Trump

"There's a major risk that the Americans would commit grave violations in this field...if one takes into account what they do in other spheres," said Viktor Bondarev, the head of the Russian Federation Council’s Defense and Security Committee.

While Trump wasn't exactly clear about what he meant, he said he hoped to achieve "dominance" in space, ignoring the fact that the US is a signatory of the 1967 "Outer Space agreement," which bans the deployment of nuclear weapons in space. However, the US has seemingly made a habit of withdrawing from major international agreements. For example, George W Bush backed out of the Anti-Ballistic Missile Treaty, and Russia has threatened to "strongly retaliate" if the US violates the outer space agreement by sending weapons of mass destruction into orbit. The treaty also prohibits states from building military bases on the moon, according to RT.

Still, violating the "Outer Space agreement" could potentially create problems because, during his speech, Trump mentioned something about establishing a "permanent presence" on the moon - though he didn't explicitly say that it would be a "military" presence. Trump said during his speech that a "separate but equal" (from the other branches of the military) Space Force would be needed for America to maintain a tactical advantage over its geopolitical adversaries (adversaries like China and Russia).

Speaking with CNN after Trump's speech, an analyst pointed out exactly why "dominance" of space will be so important for national defense in the future: "I hate the term 'the final frontier' but (space) is the ultimate high ground. Space doesn't dominate one small geographic area - it dominates continents, oceans," said US Lt. Col. Rick Francona

"Most military thinkers know this is the battle space of the future."

One US Congressman warned that the US is already behind, and that "Russia and China" are dominating the space race.

"Russia and China are surpassing us in space capabilities and we need to dedicate a separate force solely with a space mission," Mike Rogers said.

The Chinese have also spoken out against the US's planned "dominance" of space.

Responding to a question from