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[Entertainment] Did Grover Drop an F-Bomb on Sesame Street? The Internet Is Divided Grover, Sesame StreetForget what color the dress really is and the whole "Yanni vs. Laurel" nonsense...did Grover drop an F-Bomb on Sesame Street?! A video of the lovable, furry old monster talking to...
Published:12/28/2018 1:47:15 PM
[Entertainment] Taylor Hanson's Wife Natalie Gives Birth to Baby No. 6 Taylor Hanson, Natalie Anne BryantRemember Hanson? Get ready to have your mind blown: Taylor Hanson is now a father of six. The 35-year-old singer's wife Natalie gave birth to baby Claude Indiana Emmanuel Hanson the...
Published:12/28/2018 1:17:14 PM
[Markets] Bomb Rips Through Cairo Tour Bus In First Attack On Foreign Tourists In 2 Years

An explosion has ripped through a tourist bus in Al-Haram area south of the Egyptian capital Cairo on Friday, and local reports have cited government officials to confirm at least two people were killed and up to a dozen injured

Egypt's interior ministry has called it an improvised bomb blast and confirmed in a Facebook statement that among the dead were the driver and a local travel agent, as the bus was on a trip to the ancient Giza pyramids in Cairo's suburbs. Early reports indicated the bus was carrying a group of Vietnamese tourists. 

Social media photos posted in the aftermath appear to show the attack site with the twisted and blackened wreckage of the bus.

According to the AP, security officials confirmed it was a "roadside bomb" and not a device on board the bus:

Egyptian security officials say a roadside bomb has hit a tourist bus in an area near the Giza Pyramids, killing at least two people and wounding 10 others.

The officials said the bus was traveling Friday in the Marioutiyah area near the pyramids when the roadside bomb went off.

There was no immediate word on the nationalities of the tourists onboard, but the officials said one of those killed was an Egyptian.

The interior ministry further said a bomb hidden beside a wall went off at a moment the bus carrying a total 14 Vietnamese tourists was passing.

In recent years Egypt has sought to clamp down on Islamic militants, especially those operating in the Sinai Peninsula, as not only have there been an uptick in attacks targeting the country's sizable Coptic Christian minority, but to protect Egypt's multi-billion dollar tourism industry

Egypt's tourism revenue in billions, via Trading Economics/Egyptian Ministry of Tourism:

Tourism Revenues in Egypt increased to 7.60 USD Billion in 2017 from 3.80 USD Billion in 2016. Tourism Revenues in Egypt averaged 7.77 USD Billion from 2010 until 2017, reaching an all time high of 12.50 USD Billion in 2010 and a record low of 3.80 USD Billion in 2016.

Friday's attack is the first to target foreign tourists in almost two years, but given that it was carried out near the pyramids of Giza — the most visible and protected ancient site in the country  it will be sure to send government officials scrambling to assure potential visitors that all is well and safe. 

In recent comments made while on a trip to South America, archaeologist and Egyptologist Zahi Hawass announced that Egypt is a safe destination for tourists. At a press conference last week in Brazil, he said“All of the [historic] sites are very safe. There is nothing that can happen to tourists.” 

Egyptian leaders have recently committed to making great strides to return tourism to levels before the so-called Arab Spring protests of 2011 brought general instability and the Muslim Brotherhood briefly into power, and after which mass counter-protests brought back the rule of the generals. 

And further with "safety" in Egypt suddenly under the microscope, especially for its vital but fragile tourism industry, it is possible that a "peacemaker" scramble could heat up the Suez Canal.

Published:12/28/2018 1:17:14 PM
[Entertainment] A Kim Kardashian Nip Slip and More Behind-the-Scenes Details From Her Christmas Party Kim Kardashian, Christmas Party, 2018This year's Kardashian-Jenner Christmas party was certainly one to remember. Kim Kardashian and Kanye West threw the annual bash at their home this time and transformed their property...
Published:12/28/2018 12:47:40 PM
[Markets] Gloating Odey: "I Have A Lot Of Sympathy For Your Position, Sitting On The Other Side Of The Desk"

For Crispin Odey, revenge is a dish best served at 2 and 20 degrees.

The hedge fund manager, who suffered years of underperformance with many, including occasionally this site, predicting his demise when year after year Odey dared to "fight the Fed" and go all in on his bet for a "violent unwind" of the QE bubble, finally enjoyed a triumphant return in 2018 when, as we reported yesterday, his performance this year has been absolutely stellar, topping the HSBC hedge fund league table and generating nearly double the return of his next closest peer with a 52% YTD return for his European fund.

And so, in a characteristically brief note in his latest investor letter, Odey takes a well-deserved victory lap with an extra dose of gloating on the side, aimed at no one in particular yet targeting virtually every "market genius" who rode the central banks' coattails for a decade and was a brilliant investor - as long as the overall market rose and could fool LPs that beta is alpha - only to crash and burn in 2018, confirming yet again that the phrase "hedge fund" is - with a few very rare exceptions - nothing but a laughable oxymoron. We present his manager's commentary in its brief entirety below:

I have a lot of sympathy for your position, sitting on the other side of the desk.

This is late cycle economics. Consumers are sated and over-borrowed. Companies have extracted all the margin they can and have leveraged themselves as well. Cheap money has spawned competition. Populism risks playing about with prices and property ownership. Recessions will not be altogether unwelcome given that they deal with the problem of rich and poor and young and old. The rich lose money which pleases the poor. The old lose their jobs and the young are the first to be reemployed. Without recessions this redistribution has to be done through taxation and legal theft.

In all of this there are few people doing well. ETF’s, Quant funds, hedge funds, stock pickers, private equity and distressed bond funds offer little diversification and little protection, but to invest with us you are having to disown the majority of your portfolio. Do you want to own something which if it does well merely highlights how badly your conventional portfolios are performing? The simple answer is ‘no!’ It is just too difficult holding two contrary ideas in one’s head. Better to take a longer term view which allows you to lose a bit of money in the short-term. But my point to you is that saving your bacon in the bear market is only half our skillset. By far the most interesting and rewarding part of what we do is when we invest at the bottom. That is really when you want to be invested in our funds.

Odey's revenge is only lukewarm, however, because as MarketWatch reported earlier, Odey was his profits more than halved for the year ending April 2018 as operating profit has slumped to £8.7 million (roughly $11 million) from £18.6 million, according to the latest accounts for Odey Asset Management, which were published Friday at Companies House. The firm’s parent company, Odey Asset Management Group, saw revenue fall from £47.5 million to £31.2 million for the year.

The reason for this slump: a rise in outflows as many of the fund's investors lost patience with Crispin's truly contrarian investing strategy. A note in the document, seen by MarketWatch, said: "Although the year shows a fall in revenue, this was in line with expectations based on net outflows of assets under management."

Indeed, during its financial year Odey saw the closure of two funds, Odey European Absolute Return Fund and Odey European Allegra Fund, which closed in April 2017. As a result, total AUM as of this April were $5 billion, down from $6.1 billion in 2017, a number which likely only declined heading into the market's all time high on Sept 20.

The fund partnership had around 18 members during the year, who shared £8.6 million, which was down from £17.8 million. The member with the largest entitlement, thought to be Crispin Odey, saw his income fall from £5.5 million to £1.4 million over the period.

Of course, this all turned in recent weeks when Odey made an estimated £220 million in the wake of the Brexit vote, thanks to his big bets against the U.K. economy post-Brexit; Odey Asset Management declared short positions worth a reported £149 million against a raft of retailers and consumer-facing firms.

The accounts for Odey Asset Management also show performance fees increased to £385,000 from £60,000 in 2017. But this was far short of the £19.2 million in performance fees recorded in 2016.

Expect these numbers to reverse promptly if Odey can sustain his stellar 2018 performance into next year.

Finally, for those wondering, here are Odey's Top Holdings as of Nov 30:

Published:12/28/2018 12:47:40 PM
[Entertainment] Rebel Wilson Says She'll Get Married Next After Co-Stars Liam Hemsworth and Priyanka Chopra Liam Hemsworth, Rebel Wilson, Isn't It RomanticThe cast of Isn't It Romantic has been having a very romantic month! Liam Hemsworth just confirmed this week that he and Miley Cyrus have officially tied the knot. The duo got married...
Published:12/28/2018 12:17:17 PM
[Entertainment] 'America's Got Talent' exclusive: Susan Boyle explains why she's returning for 'Champions' Nine years after she shot to stardom on "Britain's Got Talent," viral sensation Susan Boyle is returning to the singing competition for another go.
Published:12/28/2018 12:17:16 PM
[Markets] Sears Liquidation May Begin Within Hours As $4.6 Billion Rescue Bid Unravels

Sears, which filed for bankruptcy in October, has less than 24 hours to survive.

The 125-year-old employer of more than 68,000 has one last shot at survival as it waits for a $4.6 billion rescue package by chairman Eddie Lampert to materialize, according to CNBCwhich adds that Lampert's ESL Investments has been the only party offering to buy Sears as a whole. 

Without Lampert's bid or another like it, the company will be broken up into pieces by liquidators. Unfortunately, the embattled chairman is running out of time

As of Thursday afternoon, Lampert had neither submitted his bid, nor rounded up financing, the people familiar said. Should Lampert submit a bid, Sears' advisors would have until Jan. 4 to decide whether he is a "qualified bidder." Only then, could ESL take part in an auction against liquidation bids on Jan. 14.

It is possible Lampert, Sears' largest investor, secures financing in time to meet the deadline, these people said. The hedge fund manager turned retailer has managed last-minute feats before. Due to requirements by the Securities and Exchange Commission, Lampert will be required to make his bid public. That stipulation that could sway him to prolong the filing until its exact deadline of 4:00 p.m. ET Friday. -CNBC

If the deadline passess, Sears and Kmart could both be liquidated within weeks, according to bankruptcy court guidelines - however that process has already slowly begun, as the retail icon weighs the closure of 50 to 80 more stores on top of the 142 unprofitable locations announced to be closing amid the October 15 bankruptcy filing. In November, 40 more store closures were announced. 

In short, there has been a slow-paced liquidation underway. 

Lampert reportedly planned to save Sears by combining it with Kmart - which ESL bought out of bankruptcy after its 2002 filing, however the cultures of both stores were too different to make the integration successful as cross-selling agreements between Sears' appliances and Kmart's apparel was a dud. 

In his five-year reign as CEO and even longer term as chairman, Lampert has largely run the company like the hedge-fund manager he once was, say former executives, employees and people familiar with his thinking. That meant investing less in its stores and advertising, believing such investments were optional.

It also meant keeping Sears alive through complex investments from ESL. Lampert poured millions of dollars through ESL into Sears, which struggled for years with losses and debt. Those investments came amid Lampert's strong belief in his ability to turn Sears around, in part through its loyalty program, "Shop Your Way," say people familiar with Lampert's thinking. But Sears finally hit a cliff, when it had a $134 million payment it could not meet. -CNBC

Prior to the October bankruptcy filing Sears was easier to keep afloat, as ESL's loans were largely protected by Sears' assets such as its prime real estate portfolio. Now, not so much. ESL's talks to save the company by financing a junior portion of Sears' bankruptcy loan fell apart after Lampert demanded that lenders improve the terms of the loan and offer him more protections. 

The $4.6 billion rescue offer, meanwhile, contains various tranches of financing as well as some of Lampert's own cash. Unfortunately,  the outside lenders he has asked to support his bid are apparently not as motivated to save Sears from its Friday demise. 

The asset-based loan he is seeking has faced scrutiny from investment banks, weary of lending to a business that hasn't turned a profit since 2010.

Some creditors he asked to support his offer have called his efforts to keep Sears alive a "foolhardy gamble with other people's money," according to court filings. They have also taken aim at his efforts to fund $1.8 billion of his bid by forgiving Sears debt owed to him, through a so-called credit bid.

Those creditors last week said they believe there may be claims against Sears for transactions under Lampert's leadership. Those deals include Sears' spinoff of Lands' End and transactions with Seritage Growth Properties, a real estate investment trust Lampert created through select Sears' properties. As such, they have said they will object to the credit bid.

Lampert could use his own cash to backstop the $1.8 billion credit bid, but it remains unclear whether he is willing to do so.

Meantime, Lampert has also asked as part of ESL's bid that Sears' creditors agree to a release from potential lawsuits over his past transactions. With the threat of litigation looming large, that ask is far from trivial. -CNBC

So - unless Lampert can pull off an 11th hour miracle, the death rattle of retail behemoths just got considerably louder.  

Published:12/28/2018 11:16:42 AM
[Entertainment] It's a Tense 90 Day Fiancé Confrontation for Ashley and Jay Over His Secret Dating App 90 Day Fiance, Jay Smith, Ashley MartsonWhat do you do a few days after your wedding? Well, if your Jay Smith from 90 Day Fiancé, you bask in the wedded bliss by joining a dating app. His account didn't escape new wife Ashley...
Published:12/28/2018 11:16:42 AM
[Entertainment] Find Out When All the New and Returning TV Shows Premiere in 2019 TV Midseason CalendarIt's that time of the year, a dark time, a time when there aren't new episodes of your favorite TV shows to comfort you during the snow storm and/or forced family bonding. But new episodes...
Published:12/28/2018 10:46:40 AM
[Markets] Harris, Booker And Warren To Announce 2020 Bids Next Month: NBC

One months from now, most of the contenders for the 2020 Democratic nomination will have officially declared their intention to run, according to NBC News. In a report published Friday, NBC News said that Senators Elizabeth Warren, Kamala Harris and Corey Booker are all planning to announce their campaigns next month, while a handful of other contenders are also gearing up for campaign launches of their own.


The reason candidates are planning to announce so early in the cycle really comes down to one factor: Money, as NBC explained. Particularly in what's expected to be an intense battle of attrition between potentially more than a dozen candidates, the candidates with the biggest purses will have a distinct advantage.

Many potential Democratic candidates have circled January or early February on their calendars as the ideal launch window — early enough to try to raise an impressive amount of money in the first quarter of the year without stepping on November's midterm elections.


Meanwhile, Democratic Sens. Elizabeth Warren of Massachusetts, Cory Booker of New Jersey and Kamala Harris of California are all also quietly preparing for potential campaign launches in early 2019, people close to them have said.

Meanwhile, Joe Biden and Bernie Sanders - the two leading candidates according to the opinion polls - have said they will decide whether to seek the nomination by the end of next month. According to the latest poll of likely Iowa caucus-goers, Biden holds a commanding lead. However, many politicos have pointed to his age (he's currently 76) as a factor (even though another poll showed that Biden is the only serious Democratic contender who would have a chance against Trump). 

Other candidates who are expected to announce next month are former Obama Housing Secretary Julian Castro and South Bend Mayor Pete Buttieig (Texas Congressman Beto O'Rourke's name was conspicuously absent from the NBC story).

"I have an announcement on Jan. 12," Julian Castro, the former Obama Housing secretary, who is publicly exploring a presidential campaign, said on NBC's "Meet the Press" on Sunday.


"Anything I might do politically is probably not something that I'll be making any news about before January," Mayor Pete Buttieig of South Bend, Indiana, said this month after announcing he won't run for re-election, potentially to make a bid for the presidency.

Another name that was notably absent from the NBC report: Hillary Clinton. Two Clinton allies wrote in an editorial earlier this year that they expect her to run - and that if she does, she will strategically wait until later in the cycle in the hope that she can capitalize on the disarry that could emerge once a unifying front-runner fails to emerge.

Published:12/28/2018 10:46:40 AM
[Entertainment] Ring in John Legend's 40th Birthday By Looking at His Cutest Moments With His Kids, or Rather, His Mini Mes John Legend, Miles, InstagramIt's time to break out the cake and balloons because John Legend is celebrating his 40th birthday today. Can you believe the "All of Me" singer is turning the big 4-0 today?...
Published:12/28/2018 10:16:42 AM
[Markets] WTI Extends Losses After Production Rebounds To Record

WTI has slid lower overnight following API's surprise large crude build (and no equity pump) and was unable to hold gains after a bigger than expected gasoline build (and tiny crude draw) along with a production rebound to record highs.

If U.S. crude output rises, it’s likely to see more inventory builds, according to Stewart Glickman, an energy equity analyst at CFRA Research. “The Permian has surprised to the upside over the last couple of months,” he says.



  • Crude +6.92mm

  • Cushing +1.76mm

  • Gasoline +3.67mm

  • Distillates -598k



  • Crude _46k (+3.4mm exp)

  • Cushing +799k

  • Gasoline +3.003mm (+1.0mm exp)

  • Distillates +2k

Tiny crude draw (4th week in a row) but another Cushing build along with a rise in gasoline stocks took the edge off for the bulls.


US Crude production had stalled from its never ending surge higher in recent weeks as the rig count stabailized but rebounded to record highs last week...


WTI hovered around $44.50 into the DOE print and was very modestly lower after....


Published:12/28/2018 10:16:42 AM
[Entertainment] Southern Charm's Kathryn Dennis Celebrates Christmas With the Kids Amid Custody Battle  Kathryn Dennis, Kensington, Saint, Christmas 2018Kathryn Dennis was all smiles as she celebrated Christmas with her children amid a custody battle with their father and her ex-boyfriend and Southern Charm co-star, Thomas Ravenel. She...
Published:12/28/2018 9:47:32 AM
[Markets] Dow Drops 300 From Overnight HIghs, Bonds & Bitcoin Bid

Dow futures tagged yesterday's highs overnight and have now fallen over 300 points since. Treasury bonds are bid, with 10Y yields well lower on the week, and cryptos just exploded higher...

While it looks like a fleshwound compared to the last two days historic panic buying ramps, stocks are being faded...


Bonds are well bid...


And Bitcoin, Ethereum, and Litecoin suddenly spiked...

Is it time for stocks to catch back down to bonds?


Published:12/28/2018 9:47:31 AM
[Markets] Chicago PMI Prints Above Highest Estimate, Rejects Richmond Fed Collapse

Just days after a weak NY Fed print and a dramatic plunge in the Richmond Fed manufacturing index sparked concerns that the next US recession may be just around the corner, yesterday's initial claims which came in surprisingly strong eased fears; and now, the just published December Chicago PMI index also put the Richmond Fed collapse on the backburner, with a number that was just shy of all time highs, as the index dipped modestly from 66.4 to 65.4, far above the consensus estimate of 60.3 (also above the highest analyst estimate of 65) and not too far off the all time high of 68.0 printed in December 2017.

Looking at the internals, we find that the number of components rising vs last month was three.

  • Business barometer rose at a slower pace, signaling expansion
  • Prices paid rose at a slower pace, signaling expansion
  • New orders rose at a slower pace, signaling expansion
  • Employment rose at a slower pace, signaling expansion
  • Inventories rose at a faster pace, signaling expansion
  • Supplier deliveries rose at a slower pace, signaling expansion
  • Production rose at a faster pace, signaling expansion
  • Order backlogs rose at a faster pace, signaling expansion

Will January resume the uptrend in this traditionally optimistic survey, or will a delayed reflection of reality drag it down? Find out in 30 days.

Published:12/28/2018 9:06:31 AM
[Markets] US-China Trade Paradoxically Explodes Amid Trump Trade War

Washington and Beijing may be locked in an ongoing trade war, but you wouldn't know it looking at America's busiest ports, according to Bloomberg's Shawn Donnan. 

A few days before Christmas, the container ship “SM Shanghai” was steaming toward California’s Port of Long Beach. Just ahead and coming to the end of an 11-day journey from China, the “Ever Lucent” was headed for the nearby Port of Los Angeles, where the “Thomas Jefferson” was preparing to sail in the opposite direction for Xiamen.

The global economy, in other words, was chugging along nicely on one of the world’s busiest sea lanes. Trade wars be damned. -Bloomberg

Donnan notes that "President Donald Trump’s assault on globalization has had a paradoxical effect on world trade flows," suggesting that retail and other industries are rushing to get ahead higher tariffs down the road - "particularly on U.S. imports from China." 

"The warehouse and distribution centers are full in southern California," according to Port of Los Angeles spokesman Phillip Sanfield. "We’re experiencing some logistical issues at the San Pedro ports just because there’s so much cargo in play here."

Following a record 2017 when the Port of Los Angeles processed the equivalent of 9.3 million shipping containers, December has put the port back on track to report another record-breaking year in 2018 according to Sanfield. Meanwhile, traffic at the Port of Long Beach increased over 7.3% through November - which, like the Los Angeles port, would put it on record to surpass last year's record at 7.5 million containers. 

That said, the explosion in trade could be interpreted as Trump's tariff war backfiring when it comes to reducing the US appetite for China-produced goods - as the the US imported more goods and services than ever in October based on value terms according to the latest data from the Commerce Department. That said, US exports also approached an all-time monthly record set in May.

Despite a September prediction by the World Trade Organization (WTO) that global trade growth would ease this year by 0.8 percent to 3.9 percent - still high by recent standards. For comparison, Bloomberg notes that international trade volumes in 2016 grew by just 1.8 percent. 

"Many people want to shout that the sky is falling on trade because of these trade measures" imposed by the Trump administration, said WTO chief economist Robert Koopman. For now, however "we think 2018 is going to end up with a fairly solid year."

That said, there are less-than-rosy takeaways to the burgeoning trade; for starters, record volumes at West Coast ports indicates that Trump's trade war has done far more to reduce US exports to China than the other way around - which was kind of the point. 

Increased traffic at the Port of Long Beach included a surge in empty containers being shipped back to Asia. In November alone the port saw more than 186,000 empty containers sent on that trip, 11 percent more than last year.

While U.S. retailers have stepped up purchases of Chinese products to avoid tariffs later on, “you’re seeing the opposite effect on the other side of the ocean,” said Mario Cordero, the port’s executive director. “Chinese businesses seem to be already looking to other countries for goods and raw materials, meaning there’s less demand for American exports and more empty containers.” -Bloomberg

Then there's the future. 2018's mad rush - especially if it is to get ahead of future tariff increases, could set the stage for a dismal 2019. This is a particular concern for the Port of Los Angeles, which expects a slowdown. "We’re probably going to see a softening of trade," said Sanfield. 

Of course, Trump and China's Xi Jinping agreed to a December 1 truce, which included a 90-day delay on a $200 billion tariff increase on Chinese imports. The stopgap arrangement includes January talks and the postponement of tariff increases until at least March 1. 

A U.S. delegation will head to China in the week of Jan. 7 to hold talks with Chinese officials, two people familiar with the matter said.

What comes after that is unclear, as the moratorium could easily be extended for another 90 days if the two sides make even faint progress in negotiations. For many retailers, such a move would extend the uncertainty -- and quite possibly their buying spree from China.

That for many means continuing the push to stock up on products from existing vendors in China rather than shifting supply chains that have taken years to establish, said Jonathan Gold, the National Retail Federation’s resident supply-chain expert. -Bloomberg

"Many are trying to find those alternative sources," said Gold. "The problem is it takes time. It’s not like a light switch. You can’t just switch vendors."

Published:12/28/2018 8:46:02 AM
[Entertainment] Aw! Watch Jennifer Lopez's Daughter Sing a Love Song With Alex Rodriguez's Kids Jennifer Lopez, Alex Rodriguez, Kids, Max, Emme, Twins, Daughters, Natasha, Ella, Lakers GameWe can't help falling in love with this sweet moment. It's no surprise that the kids in Jennifer Lopez's life are flexing their musical muscles with some guidance from the...
Published:12/28/2018 8:15:04 AM
[Markets] Tesla Names Musk's "Very Close Friend" Larry Ellison and Kathleen Wilson-Thompson To Its Board

As part of the terms of a settlement with the Securities and Exchange Commission, Tesla and its CEO Elon Musk agreed in September to appoint a new chairman and two new independent board members to Tesla's board. The reason: to create some independence on the Board and oversight on Musk, who can't seem to stay out of his own way.

So this morning, Tesla announced that its board had proposed the appointment of self-described "very close friend" of Elon Musk, Larry Ellison, and also Kathleen Wilson-Thompson, who is global head of human resources at Walgreens Boots Alliance and was at the company during the Theranos debacle. Shares of Tesla were higher by about 3% on the news early Friday morning.

The company's existing Board members stated : “In conducting a widespread search over the last few months, we sought to add independent directors with skills that would complement the current board’s experience. In Larry and Kathleen, we have added a preeminent entrepreneur and a human resources leader, both of whom have a passion for sustainable energy.” 

... And another one of Elon's pals. 

It is well-known that Ellison has been a long-term investor in Tesla and a fan of Elon Musk. Back in October of this year, he disclosed that Tesla was his second largest personal investment. At the time, Ellison referred to Musk as his "very close friend":

“My second-largest investment, I will disclose it now, I am not sure people know I am very close friends to Elon Musk and I am a very big investor in Tesla. And so Tesla had a good day, and I think Tesla has a lot of upside.”

In the same call, Ellison referred to Musk as his "friend" again and defended the CEO smoking pot on the Joe Rogan podcast:

“I loved all the articles about how Elon doesn’t know what he is doing, the pictures of him smoking dope, you know, and The Wall Street Journal writing all these articles [saying] he is going to have to go out for money,” he said. “This is not just about The Wall Street Journal.”

He asked, “Why should I believe you as opposed to my friend Elon while I am out here watching this rocket land, which I think is really cool, and you are there in front of your Apple Mac typing up an article saying Elon is an idiot?”

Ellison's amusement with Musk's self-landing rockets - a technology that has been around for decades - seems to have him sold on his investment. And to say that Ellison has a penchant for "too good to be true" technology stories might be an understatement as he was also an investor in Theranos. 

From this point forward, Tesla will be in charge of forming a committee to oversee other portions of the SEC settlement.

These new board appointees are still pending a shareholder vote to confirm them.

Published:12/28/2018 8:15:03 AM
[World] How Black Mirror: Bandersnatch, Netflix's Interactive Movie, Works Black Mirror: BandersnatchRemember when Netflix released the trailer for Black Mirror: Bandersnatch? Of course you do, because it just happened. OK, so, remember how we theorized it was the first "choose your own...
Published:12/28/2018 8:15:03 AM
[Entertainment] Angelina Jolie is considering a career in politics: 'Whatever I think can really make change' Actress and U.N. envoy Angelina Jolie told BBC radio that she has not ruled out moving into politics and joked about being tough enough to handle it.
Published:12/28/2018 7:17:15 AM
[Entertainment] Pain, Depression and Heartbreak: Inside 10 Years of Lady Gaga's Brutal Honesty Lady Gaga, 10 Year Fame Anniversary Feature"I don't know quite how to explain this--I am not really made for anything else." When Lady Gaga shared that sentiment about herself shortly after bursting onto the scene in...
Published:12/28/2018 6:45:29 AM
[Markets] Trump Threatens To Close Southern Border If Dems Don't Cave On Wall Funding

Congress has departed for the holidays and it's looking as if striking a deal and passing a bill to end the partial government shut down won't happen until Congress reconvenes in the new year (and with both sides digging in their heels, many Wall Street analysts expect the affected government agencies will remain closed for at least a little while longer). But that didn't stop President Trump from reviving his threat to close the southern border if Democrats don't sign off on the $5 billion Trump needs to ramp up construction of his promised border wall.

"We will be forced to close the Southern Border entirely if the Obstructionist Democrats do not give us the money to finish the Wall & also change the ridiculous immigration laws that our Country is saddled with. Hard to believe there was a Congress & President who would approve!"

Trump first threatened to send in the military and close the border earlier this year, warning that if Congress wouldn't act to prevent caravans of migrants heading north from Central America from successfully crossing into the US, that he would do so unilaterally. He eventually followed through with the first part of that threat (though he also threatened to withhold aide from Honduras and other central American countries if they failed to stop the caravans, which...well).

Published:12/28/2018 6:45:29 AM
[Entertainment] Everything On the Basis of Sex Got Wrong About Ruth Bader Ginsburg's Life On the Basis of SexOn the Basis of Sex goes to great lengths to get Ruth Bader Ginsburg's story right. And it makes sense, considering the film, which chronicles the beloved Supreme Court Justice's...
Published:12/28/2018 5:44:51 AM
[Markets] New Yorkers Fear 'Alien Invasion' After Mysterious Blue Light Floods City Skyline

A mysterious blue light rising over Queens Thursday night sowed mass confusion in the metropolis of nearly 9 million people as thousands of city dwellers took to their social media feeds to express fears that the aliens might have finally arrived...only to learn that the source of the light was quite pedestrian.

Adding to the effect, power in nearby homes flickered, the 7 train experienced major service disruptions, Riker's Island was forced to rely on backup generators and La Guardia airport was plunged into darkness.

According to the NYPD and Con Edison, a few transformers at the Con Ed substation on 20th Avenue and 32nd Street in Astoria tripped and caused a fire at a power, which was described as the source of the eerie blue light. The fire was quickly brought under control, but not before thousands of New Yorkers took to the streets (or social media) to wonder what the hell was going on, NBC News reported.

And for 20 minutes before the NYPD revealed the cause, residents commenting on social media appeared to come to a unanimous conclusion: Aliens.

Haunting blue-tinged photos and videos flooded social media:






The NYPD and ConEd are still investigating the cause of the fire.

Published:12/28/2018 5:44:50 AM
[Entertainment] Statement Jewelry to Get Your Sparkle On E-Comm: Statement Jewelry to Get Your Sparkle OnDressing up for New Year's is the most fun. But you already know that. The shoes, the dress, the makeup--so much to be excited about. The only thing that could possibly make it any...
Published:12/28/2018 5:15:35 AM
[Markets] Wag The Dog... British Media Watchdog Accuses Russia Of Bias

Authored by Finian Cunningham via The Strategic Culture Foundation,

Irony is dead when British state media controllers accuse Russian news outlets RT and Sputnik of “imbalance” over their reporting on the Skripal alleged poisoning affair.

In the past week, Ofcom, the British media watchdog, condemned seven programs aired during March and April this year following the apparent poisoning of former Russian spy Sergei Skripal in Salisbury. The Russian outlets may be fined or denied future broadcasting rights in Britain. The latter suggests what the real, ulterior agenda is all about.

It remains a mystery as to what happened exactly to Skripal and his daughter when they reportedly fell ill on March 4 in the famous south of England cathedral town. Neither Sergei nor Julia have been seen in public since, apart from a brief and carefully controlled interview given by Julia to Reuters a few months ago, apparently having recovered from her stricken condition. Russian consular services have been denied access to Julia by the British authorities, despite her being a Russian citizen.

The murkiness of the affair, the flagrant obfuscation by the British authorities and their violation of diplomatic norms speaks of a British state intrigue aimed at provoking international recriminations against Russia. Such is the outrageous apparent skullduggery by the British state, it is arguably very appropriate therefore for critical media coverage of the incident and the subsequent prevarication by London.

However, in a staggering inversion of reality, British media regulators complain that Russian news outlets have broken “impartiality rules” in their reporting on what is a bizarre de facto disappearance of a Russian citizen and her father while in the custody of British authorities. The protagonists are off-limits from criticism; their ropey claims must be treated as the sane version of events.

Within days of the Salisbury incident, senior British officials, including Prime Minister Theresa May, were accusing Russia of an assassination attempt against the Skripals, allegedly with a Soviet-era nerve poison.

London’s narrative inculpating the Kremlin and Russian President Vladimir Putin continues, despite Russia’s vehement denial of involvement and despite the lack of independently verifiable evidence.

This week, in her Christmas speech to the nation, premier May again repeated her condemnation of the “nerve agent attack in Salisbury” and she praised British armed forces for “protecting the country’s waters and skies from Russian intrusion”.

So, Russian media are castigated for “bias”, but British media are evidently permitted to report and broadcast official British assertions that are unproven and wildly sensational, if not tantamount to inciting international conflict. Just who is breaking journalistic standards?

Among the news outlets reporting May’s words were the BBC. The government-owned British broadcaster routinely and snidely refers to Russian news outlets RT and Sputnik as “Kremlin-backed”. As if the state-backed BBC is somehow immune from disseminating British government propaganda.

May’s assertions in her Christmas speech about Russia carrying out an alleged assassination and threatening Britain with invasion went unchallenged by the BBC. Nor were her other claims about chemical weapons being used by Syrian government forces against civilians.

On Syria, May was referring to an incident near Damascus in April this year when toxic chlorine was purportedly used in an assault on civilians. Back then, the British prime minister joined with US President Trump and France’s President Macron to order air strikes on Syria, supposedly in retaliation for the Syrian army’s use of chemical weapons. But it soon transpired that the incident was a provocation staged by jihadist militants and their media operatives, the so-called White Helmets. In other words, the British, American and French carried out a criminal act of aggression against Syria under false pretenses.

Yet May in her solemn set-piece nationwide Christmas speech this week was allowed by British media to repeat blatant lies against Syria, and brazenly avoid the issue of justice facing her government over illegal air strikes on Syria, as well as to continue smearing Russia over the murky Skripal affair.

The arrogant hypocrisy of British media and the state regulator is astounding. British citizens are compelled by law to pay an annual license fee of £150 ($190) per household for possessing a television set. Failure to pay can result in a jail sentence. The TV license fee collected by the British state is handed over to the BBC. So, here we have a state-owned media channel that is funded through a compulsory tax on citizens, and yet this same channel willingly broadcasts British government propaganda claims denigrating Russia and covering up for British war crimes in Syria. If that sounds Orwellian, that’s because it is.

The BBC’s corporate advertising claims to be the “world’s leader in breaking global news”. It also assures its listeners and readers that it produces “news you can trust”.

There are countless cases where the BBC’s pompous self-importance can be exposed, revealing an altogether more malevolent purpose. One of the most notorious cases was its complicity in orchestrating the 1953 coup in Iran carried out by the American CIA and Britain’s MI6. In his book, Web of Deceit, British historian Mark Curtis details the crucial role played by the BBC and its Persian service in helping to foment the coup against the elected premier Mohammad Mosaddegh.

More recently, BBC coverage of the war in Syria over the past eight years has been a relentless propaganda assault on the government of President Bashar al Assad. It is not merely about omission or biased distortion. The BBC has been caught out actually fabricating fake news in Syria, such as the case when it accused the Syrian army of using napalm on civilians near Aleppo in 2013. Those reports were later exposed as deliberate fabrications.

More generally on Syria, the BBC, as with other Western news media, are serving as facilitators of the criminal regime-change objective of their governments. May’s grotesque falsehoods reiterated this week – in a Christmas speech of all things! – about chemical weapons are afforded respectability and apparent credibility by the way the BBC and other British outlets dutifully report her words without any qualification, let alone criticism.

It is a measure of how distorted the British media landscape is when alternative news channels which do raise critical viewpoints and insights on propaganda narratives are then accused of being “imbalanced” and “in breach of broadcasting rules”.

In response to Britain’s Ofcom regulator condemning Russia’s RT and Sputnik, Moscow is now saying that its own state regulator is considering filing a case against the BBC and how it operates in Russia. Given how the BBC tried to tie Russia to instigating the Yellow Vest protests in France and how it recently ran an article accusing the Kremlin of “weaponizing satire”, there seems much more credibility to Russian claims that the “British state-backed outlet” is in breach of journalistic standards.

The broader background of how the BBC serves British state propaganda is panoramic in its scope. But such is official British hypocrisy, the authorities attack critical news outlets that happen to expose their propaganda service posing as “news you can trust”.

Free speech in Britain? Yes, as long as you freely speak in the service of British state propaganda.

Published:12/28/2018 4:16:54 AM
[Markets] German Military Could Recruit EU Residents To Meet NATO Commitments

French President Emmanuel Macron's vision for a pan-European army might finally become a Germany.

According to the BBC, seven years after Germany abandoned conscription, the military of Europe's largest economy is struggling to fill senior roles, and might need to start hiring non-German soldiers to occupy specialized positions in its armed forces like doctors and IT specialists, said Army general inspector Eberhard Zorn, who noted that Germany is being forced to "look in all directions" as it struggles to fulfill a promise to President Trump to raise its defense spending closer to the NATO-mandated target of 2% of GDP.


The country's military has been beset by under-investment for years and is presently struggling to expand its armed fighting force by 21,000 people by 2025 and increase its defense budget from 1.2% to to 1.5% of its gross domestic product by 2024. Defense Minister Ursula von der Leyen said in an interview on Thursday that Germany now has 182,000 uniformed soldiers, an increase of 6,500 in two years. Within seven years, that number should reach 203,000. Of these, 12% of army recruits are women, and one in three applicants to officer positions are women.

Zorn was careful to point out that non-Germans would only be considered for "specialist" positions.

Gen Zorn told the Funke newspaper group that "of course the Bundeswehr needs personnel" and the army had to "push hard for a suitable new generation", although EU citizens in uniform were "an option" to be examined only in specialist fields.

The media group said the government had already consulted EU partners and that most had reacted cautiously, particularly in Eastern Europe.

Of course, there's one slight complication that could create problems for the German military: After World War II, Germany passed a law mandating that soldiers in the German army must be Germans. Suggestions that an exception might be made have been met with scepticism, particularly in Eastern Europe.

Though Hans-Peter Bartels, the member of Parliament responsible with overseeing the German armed services, noted that recruiting EU citizens was already a "kind of normality" as many members of the German army are immigrants or hold dual EU citizenship. Because of these exceptions, more than 900 foreign citizens are already employed by the German military in civilian roles.

And Germany isn't the only European power hoping to add more non-citizens to the ranks of its military. Last month, the UK said more foreign nationals would be able to join its armed forces to meet a shortfall of 8,200 soldiers, sailors and "air personnel."

Germany is hoping to have roughly 70% of its military ready for combat at any given time due to the perceived threat from Russia in the Baltics, which recently provoked the largest NATO exercise since the Cold War. Meanwhile, some academics see a 70% chance of a "hot war" erupting between NATO and Russia.

Published:12/28/2018 2:14:06 AM
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[Markets] The Biggest Threat To The Market – Loss Of Confidence

Authored by Lance Roberts via,

Yesterday, saw a record surge in the markets (and another epic buying program today).

Such was not surprising given the extreme oversold condition in the market. More importantly, throughout market history, the biggest bull rallies have occurred during bear markets.

The last two day’s relief rally was simply that.

As shown in the chart below, following the breakdown of the market from its consolidation pattern in October and November, the market plunged 20% from its previous all-time highs. Despite the massive surge in stocks yesterday, all the market managed to do was recoup 2-days of losses.

From the previous peak in early December, the market has yet to even achieve a 38.2% retracement of that decline. It would not be surprising to see this rally try and recoup a full 61.8% of the decline over the next several weeks.

However, that may not even be enough to solve the biggest risk to the market currently. 

In 2010, as Ben Bernanke was preparing to unleash the second round of “Quantitative Easing” upon the economy, he noted specifically the goal was to increase the “wealth effect” in order to assist the nascent economic recovery that was underway.

What exactly does that mean?

“The wealth effect is a theory suggesting that when the value of equity portfolios are on the rise because of accelerating stock prices, individuals feel more comfortable and confident about their wealth, which will cause them to spend more.” – Investopedia

This targeting of the “wealth effect” became known as the Fed’s “Third Mandate” which remains alive and well today as recently noted by Bill Dudley during a speech at the BIS Annual General Meeting:

“As I see it, financial conditions are a key transmission channel of monetary policy because they affect households’ and firms’ saving and investment plans and thus influence economic activity and the economic outlook.” 

Over the last decade, successive rounds of both monetary and fiscal policy in the U.S. has created an inflation of asset prices to historic levels.

The problem, as I have shown previously, is that it failed to translate across the broader economic spectrum as intended. Instead, it simply boosted the wealth of the wealthiest 10% of Americans.

This was also shown in a recent study by the World Economic Forum on negative wealth. To wit:

“With respect to assets, we ask respondents how much money is in their defined contribution plan(s)—including 401(k), 403(b), 457 or thrift savings plans—and Individual Retirement Arrangement accounts, which cover the most common channels through which Americans save for retirement. We also ask the respondents about their total savings and investments, such as money in their checking accounts, stocks, and other financial instruments they may possess. Homeowners are asked to self-appraise the current value of their home. Finally, we ask for self-appraised valuations of any additional land, businesses, vehicles, or other assets the respondent’s household may own. The measure of total assets is then the sum of financial wealth, retirement wealth, home value, and other assets.”

So, what did the results show after a decade of booming asset prices?

“The chart below displays, in the leftmost column, the average and median asset and debt levels for households with non-negative wealth. The next three columns display the same statistics separately for each tercile of negative-wealth households, for example, the second column illustrates the data for those with the least negative wealth and the final column reflects households with the most negative wealth. The very low median levels of assets for all negative-wealth households are readily apparent, as are the large average and median debt amounts among households with larger negative wealth.”

The lack of distribution of wealth across the economy explains why growth, outside the short-term impact of natural disasters and deficit spending, has remained so weak.

“More importantly, if we assume that inflation remains stagnant at 2%, as the Fed hopes, this would mean a real rate of return of just 0.5%.

Economic growth matters, and it matters a lot.

As an investor, it is important to remember that in the end corporate earnings and profits are a function of the economy and not the other way around. Historically, GDP growth and revenues have grown at roughly equivalent rates.”

Wealth Effect Runs In Reverse

Of course, the problem for the Fed, who are now in the process of reversing a decade of monetary stimulus, is when the “wealth effect” reverses. As noted by my friend Doug Kass:

“The prospects for economic and profit growth are waning in the face of the rapid drop in stock prices. 

According to Wilshire Associates, the U.S. stock market fell by $2.1 trillion last week.

That loss in value is more than 10% of the 2017 U.S. Gross Domestic Production (GDP) of $19.3 trillion. (Our domestic GDP represents approximately 31% of world GDP). The loss in value from the September 2018 market top is well in excess of $5 trillion, representing about 25% of projected 2018 U.S. GDP.

The fixed income’s message of slowing economic and profit growth has been resounding — and until recently has been dismissed by most who were intoxicated by rising equity prices and favorable (but lagging) economic data.

Given the steady drumbeat of disappointing high-frequency economic data that suggest consensus growth expectations are too optimistic and underscores the fragile state of the domestic economy, this is a particularly untimely period for stocks to crater.

The economy — from a rate of change standpoint — is now at a critical point. No doubt a lot of damage to forward 2019 economic growth has already occurred and will result in a reduction in consensus profit forecasts.”

Of course, Doug is absolutely correct and we have already been consistently warning about the downdraft in forward earnings expectations which still remain way too elevated. As shown below, the forward estimates for 2019 have already fallen by more than $13/share and will likely hit our target of $146 by early next year.

By the way, that decline will wipe out the entire benefit of the “tax cuts.”

But that decline in profitability should not be surprising given the decline in confidence among consumers. Our friends at Upfina recently penned an interesting piece on this point:

“The consumer expectations index minus the current situation index in the consumer confidence report is signaling a recession is coming

We are reviewing where consumer spending is headed by showing the differential between expectations and the current situation. As you can see from the chart below, the current differential is worse than the last cycle, but still higher than the 1990s cycle. Recessions come after this indicator bottoms, and there isn’t much room for it to fall further.”

The chart below is a slightly different variation of Upfina’s which shows the composite index of both University of Michigan and the Conference Board measures of confidence. However, the results are virtually the same with the difference between forward expectations and current conditions ringing in at levels that have normally preceded recessions.

Given that GDP is roughly 70% consumption, deterioration in economic confidence is a hugely important factor. Rising interest rates which bite into discretionary cash flows, falling house and stock prices, and job losses weigh heavily on spending decisions by consumers. Reductions in spending reduce corporate profitability which leads to lower asset prices, so forth, and so on, until the cycle is complete.

None of this should be surprising, of course, as we head into 2019. We saw record low levels of unemployment and jobless claims. Record high levels of sentiment on many different measures. However, as I wrote in August of this year:

“Record levels” of anything are “records for a reason."


  • Bull markets END when everything is as “good as it can get.”

  • Bear markets END when things simply can’t “get any worse.”

Currently, we are in the early stages of the transition from “bull” to “bear.” 

As investors begin to understand the magnitude of their losses in “dollar” terms, the impact to confidence will become an important headwind for the market. With higher rates already curtailing home and auto purchases, falling asset values will likely start to weigh more significantly on other purchasing decisions.

This was a point made by Bloomberg yesterday:

“The outlook [for additional rate hikes], however, is likely to be tempered by market volatility as falling stocks hurt consumption by reducing household wealth. Business confidence is damaged as volatility rises, the cost of capital increases, and uncertainty over government policies — be it a trade war or an assault on the Fed — forestalls investment.”

Confidence drives everything.

Which also continues to suggest the risk of a recessionary onset in 2019 has risen markedly in recent months.

In other words, it is quite likely the recent roar of the “bear” is not the last we are going to hear.

Published:12/27/2018 8:43:46 PM
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[Markets] "The Worst Is Yet To Come Next Year..."

The day after The Dow soars by the most points in history, and on the biggest reversal day in stocks since 2010, Michael Snyder provides a little context for what is really occurring...

When talking heads on mainstream news networks are using phrases such as “the worst is yet to come next year”, that is a clear indication that a new financial crisis has arrived.  And that is an extremely bold statement to make considering that this is already the worst quarter for the stock market in 10 years, this is the worst December for stock prices since 1931, and we just experienced the worst Christmas Eve that Wall Street has ever seen.  So when Mark Jolley made the following statement during a recent guest appearance on CNBC, it definitely raised some eyebrows…

“I would love to be more optimistic but i just don’t see too many positives out there. I think the worst is yet to come next year, we’re still in the first half of a global equity bear market with more to come next year,” Mark Jolley, global strategist at CCB International Securities, told CNBC’s “Squawk Box.”

At this point last year, nobody on Wall Street was talking like this.

In fact, nobody was talking like this even four or five months ago.

But after three extremely painful months the outlook has completely changed, and a lot of market participants are really starting to freak out.

And this is not just happening in the United States.  The truth is that most most markets around the world started to fall well before U.S. markets did, and at this point almost all of the big global indexes are in a bear market

Bear markets — typically defined as 20 percent or more off a recent peak — are threatening investors worldwide. In the U.S., the Nasdaq Composite closed in a bear market on Friday and the S&P 500 entered one on Monday. Globally, Germany’s DAX, China’s Shanghai Composite and Japan’s Nikkei have also entered bear market levels.

This is the first global bear market that we have seen in a decade, and if central banks are going to try to stop the bleeding they will need to move very quickly.

But the Federal Reserve has already indicated that they do not plan to intervene.  In fact, they just told everyone that they plan to keep raising interest rates.

That is completely insane, but since they aren’t accountable to us they can literally do whatever they want.

So if the central banks don’t step in, who is going to come riding to the rescue?

Individual national governments could try to stimulate economic activity by spending more money, but most of them are already drowning in debt.

Just look at the mess that the U.S. government has created.  Since the beginning of the last financial crisis, we have been adding more than a trillion dollars a year to the national debt.  And over the last 12 months our debt problems have actually accelerated.  Between December 25th, 2017 and December 25th, 2018 we added almost 1.4 trillion dollars to the national debt.  The following comes from CNS News

The federal government has added another $1,370,760,684,441.54 to the debt since last December 25according to numbers published by the U.S. Treasury.

On Dec. 25, 2017, the federal debt was 20,492,874,492,282.58, according to the Treasury.

According to the latest numbers published by the Treasury, which show where the debt stood on Dec. 20, 2018, the federal debt was $21,863,635,176,724.12.

So the reality of the matter is that there is simply no room for more “stimulus spending”, because we have already been spending money like drunken sailors that think that they are likely to die tomorrow.

Right now the government is shut down as President Trump and Chuck Schumer square off over 5 billion dollars in border wall funding.  But nobody on Capitol Hill is even talking much about the 1.37 trillion dollars that we just added to the national debt, and that is really what everybody should be focusing on.

We are literally committing national suicide.  No matter what happens with border wall funding, the U.S. will continue to steamroll toward financial oblivion unless something is done about this horrific debt that we are accumulating.

As I wrap up this article, I would like to share something that Austin Murphy wrote that really struck a chord with me.  Over the course of a 33 year career in journalism, Murphy interviewed five presidents and wrote thousands of articles for Sports Illustrated.  But now he is delivering packages for Amazon

Let’s face it, when you’re a college-educated 57-year-old slinging parcels for a living, something in your life has not gone according to plan. That said, my moments of chagrin are far outnumbered by the upsides of the job, which include windfall connections with grateful strangers. There’s a certain novelty, after decades at a legacy media company—Time Inc.—in playing for the team that’s winning big, that’s not considered a dinosaur, even if that team is paying me $17 an hour (plus OT!). It’s been healthy for me, a fair-haired Anglo-Saxon with a Roman numeral in my name (John Austin Murphy III), to be a minority in my workplace, and in some of the neighborhoods where I deliver. As Amazon reaches maximum ubiquity in our lives (“Alexa, play Led Zeppelin”), as online shopping turns malls into mausoleums, it’s been illuminating to see exactly how a package makes the final leg of its journey.

Like Murphy, America’s future is going to be far less bright than its past if we don’t get things turned around, and right now there is absolutely no indication that this is going to happen.

Our national problems are multiplying, the conditions for a perfect storm are rapidly coming together, and pessimism is quickly growing all across America.

Mark Jolley believes that “the worst is yet to come next year”, and in the end he may turn out to be exactly correct.

Published:12/27/2018 8:13:37 PM
[Markets] "Imminent Collapse": US Farmers Prepare For Massive Losses In Japan 

On December 30, Tokyo will begin reducing tariffs and easing quotas on products sold by US' largest agriculture competitors -- including Australia, Canada, Chile, and New Zealand, as part of the new 11-member Comprehensive and Progressive Agreement for Trans-Pacific Partnership (TPP), the Wall Street Journal reported.

President Trump had removed the US from the TPP last year, alleging it would have crippled American manufacturers by minimizing duties on US imports of automobiles.

Tokyo will slash duties to other countries on Feb 1 by implementing the European Union-Japan Economic Partnership Agreement (EPA) that would offer the 28-country bloc’s agricultural products to Japan, a move that could dramatically reduce US market share into the island nation in the Pacific Ocean. 

Japan, unlike China, is not playing the retaliatory tariff game with the Trump administration. Instead, they are accelerating a market-opening agenda with more than three dozen countries (ex. the US). 

The new free trade push by Japan “threatens to cut into US market share and depress profits for US agriculture exporters by granting preferential access to…internal competitors,” a May report by the Agriculture Departments warned.

At a recent public hearing, a coalition of US agriculture trade groups sounded a similar alarm.

“Japan is our largest, most reliable and valuable market,” buying about half its imported wheat from Americans, said Vince Peterson, head of US Wheat Associates. “But today we face imminent collapse,” he said, as competitors will start taking American market share and sell their products at an effective tariff rate nearly 10% below those facing US producers.

Peterson told government officials the US “has not sold one kernel of wheat” to China for several months because of the trade war. 

The US Meat Export Federation estimated that Japan’s new trade agreements (ex. the US) could severely damage American beef and pork exports, with expected losses of more than $1 billion within five years. 

The Trump administration has said they aim to correct that "emerging disparity by laying the groundwork to negotiate America’s own free-trade agreement with Japan," the Journal reported, adding that a new deal would reopen markets for American farmers.

However, those negotiations with Tokyo are not scheduled to start until mid-January -- after both the Pacific and Europe trade deals take effect. 

US producers have already reported steep declines in business as a result of Trump pulling out of the TPP as Japan explores new markets. 

Kevin Smith, a vice president at Seaboard Foods LP, a Kansas-based pork producer, said his business is  “already seeing a decline” as longtime Japanese customers “develop new supply chains so they can be fully prepared to take advantage of the tariff reduction opportunities.”

The Journal notes that US farmers are horrified about the loss of market share because Japan has been one of their largest export markets. 

American producers are the most significant food exporters to Japan, with at least 25% market share, ahead of the EU’s 13%. 

Japan imported $11.9 billion in American agricultural products in 2017, making it their fourth-largest foreign market, after China, Canada and Mexico.

And while president Trump has argued that, overall, TPP would have harmed the American economy, for now due to lack of proper deterrence and countermeasures in place, it appears that like pulling out of TPP has forced even more pain upon America's struggling farmers who had export routes into Japan, and who may soon need another bailout from the administration. 

Published:12/27/2018 7:12:28 PM
[Markets] Judges Insist Legal Challenges To Trump Policies Must Continue During Shutdown

If President Trump needed an ulterior motive to keep his partial government shutdown alive for the foreseeable future, this is it. Since the shutdown began, Trump has argued that federal courts should not be exempt - which means the many legal challenges to Trump administration policies should be frozen for the time being.

But according to Bloomberg, federal judges are pushing back, arguing that some of the court challenges involve issues of public safety - or are otherwise finding excuses to keep the challenges moving forward in spite of the administration's wishes.


In one case, a district judge is refusing the administration's request to delay briefings in a challenge to Trump's new asylum policy, which requires asylum applicants to present themselves at legal points of entry to have their claims heard.

"Government functions may continue" when they relate to "the safety of human life or the protection of property," Moss wrote Thursday. The judge cited a government report indicating that a large proportion of the federal government’s immigration employees, including 91 percent of Customs and Border Protection workers, should continue working during shutdowns.

The government is also pushing to move ahead with a case filed in San Diego challenging its family separation policy.

"Although we greatly regret any disruption caused to the court and the other litigants, the government hereby moves for a stay of all deadlines" until funding resumes, the U.S. said in a typical request filed Dec. 26 in a suit in San Diego challenging the administration’s family separation policy.

A federal case involving the implementation of a federal monitor for the Baltimore Police Department is also moving ahead despite the adminstration's attempt to shut it down.

But a high-profile Maryland lawsuit involving the implementation of a consent decree for civilian oversight of the Baltimore Police Department won’t stop. Chief U.S. District Judge James Bredar in Baltimore called the shutdown a "dispute internal to one party" and directed Justice Department attorneys "to find the means by which to continue their participation in this litigation on a timely basis regardless of their client’s internal issues."

"Deeply serious matters involving the safety and well-being of the citizens of Baltimore are at issue in this case, and the court is determined that implementation of the previously entered consent decree will not be impaired or delayed by this sort of collateral issue," Bredar wrote in a Dec. 26 order.

The administration had better luck in Washington and San Francisco. In SF, the administration's appeal of a decision throwing out its asylum restrictions along the Mexican border will move ahead.

The government had better luck in Washington before U.S. District Judge Emmet Sullivan, who granted a request to put a case on hold in a two-sentence ruling on Dec. 26. The judge directed the Justice Department to notify the court "when appropriations are restored or if a continuing resolution is enacted."

The U.S. is pressing ahead in at least one instance. The Trump administration on Dec. 26 filed a notice in an appeals court in San Francisco that it will seek to reverse a judge’s order blocking it from implementing asylum restrictions on the Mexico border.

State AGs are also pushing for a challenge to an administration policy that they say would undermine (recently gutted) ObamaCare (though appeals to a Texas judge's ruling will need to wait).

A coalition of a dozen state attorneys general also opposed a government request to delay a Jan. 2 deadline for a crucial joint filing in an Obamacare-related lawsuit. The attorneys general challenged a Trump administration plan that would allow small businesses to join together to offer cheaper health-insurance plans -- a move the states say undermines some of the protections required under Obamacare.

The states said there’s a "reasonable likelihood" that the “protection of property would be compromised” as a result of the financial harm the new rule will cause to their group and individual health insurance markets.

"Indeed, that disruption was both the anticipated and the intended purpose of defendants’ rule-making," the states said. The Department of Labor, the defendant, "should not be delayed in moving forward with their litigation of this critical case," they said.

Unfortunately for Trump, the DOJ has already declared that the shutdown won't delay the Mueller probe.

Published:12/27/2018 6:12:24 PM
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[Markets] Investors Are Speechless: "It's Like Watching Pulp Fiction"

With market action becoming increasingly surreal and the panicked, vertigo-inducing bear market rallies (spawned by a record $64 billion pension fund reallocation into stocks in a historically illiquid market) reminiscent of the chaos observed at the depths of the financial crisis, it is only appropriate that some of the quotes Bloomberg picked for its daily wrap piece which commemorated the biggest intraday reversal since 2010, be just as surreal.

"Investors are becoming desensitized," Bryce Doty, SVP at Sit Investment Associates, told Bloomberg, then continued the verbal poetry: "It’s like watching ‘Pulp Fiction.’ Halfway through, the violence doesn’t even bother you anymore."

He's right, although whereas the market "violence" in past weeks was one directional, this week it has developed a twist to trap both the bulls and bears, and while the latest Dow swing (of nearly 1000 points) was only slightly bigger than the average up-and-down move last week, back then equities were merely tumbling, now it tends to drop early in the day then soar in afternoon trading. So fast forwarding to the post-Christmas chaos - which this website explicitly warned about when last Friday we said to "Brace For Seismic Volatility" - strategists are starting to ask: if days like these are now normal, is there a context in which the whole three-month rout starts to feel routine?

There are the optimists like Jim Kelleher, director of research at Argus Research, who said market turmoil that happens when the economy is holding up reminds him of past stock declines that ended gently.

Unless evidence emerges of deep global growth erosion, what’s going on now “will prove to be shorter and more shallow than the declines experienced in ‘classic’ bear markets.”

Others are not so sure: "Investors are wondering if this will be a crash,” said Dave Campbell, a principal at San Francisco's BOS, who nonetheless still managed to put a favorable spin on events.

"The risks are there, but they’re always there. They’re more heightened but it’s not the most likely outcome. The economy continues to grow - maybe a little more slowly - but next year markets will have hit their lows and we’ll be on the rebound."

Then there are those who echo what we asked yesterday, namely if this is only a bear market rally, although granted a very furious one: as Bloomberg writes in its second end of day wrap, "on the surface, the rally is good news for investors searching for a bottom after a three-month sell-off sent the S&P 500 to the brink of a bear market. But days like this are rarely good omens."

Here's the problem: as we discussed last night, since 1990, every comparable reversal - with a few exceptions - came during the 2008-2009 bear market.  According to Bloomberg data, in eight previous bear markets the S&P 500 experienced rallies of greater than 2.5% more than 120 times as the benchmark plunged from peak to trough. From the collapse of Lehman to the financial crisis bottom in March 2009, the S&P 500 rallied more than 4 percent on 13 different occasions.

"This is not the kind of price action you see in normal bull markets,” said Robert Baird equity sales trader Michael Antonelli. "This is just a face ripping short cover rally. I am 100 percent not saying we are in a situation like 2008 now, but look at October 10, 2008 to October 13, 2008: the market rose nearly 12 percent in one day. October 27 to October 28, 2008, it rose 11 percent."

In other words, as Bloomberg notes and as Antonelli said yesterday, much as the market has shown the impetus to rally, "violent action like this normally don’t bespeak a healthy market." The latest bounce happened during a holiday week when prices are typically susceptible to swings because of low liquidity, which in the context of the ongoing $64BN pension rebalancing, makes sense that we would see a massive swing higher as the market at times goes offerless.

Jeff deGraaf, co-founder of Renaissance Macro Research, may have summarized trader sentiment best:

“How much do we trust the market’s message, up or down, over this holiday week? About as much as we trust uncle Albert to drive home after Christmas dinner.”

And speaking of a Pulp Fiction market, at least there is no friction as investors are now getting used to the daily whiplash: Thursday marked the ninth time this quarter where the S&P 500 reversed an intraday move of at least 1%. That’s the most since August 2011, when S&P downgraded the U.S. sovereign rating, sending stocks also within points of a bear market.

Which begs the question: having failed to firmly enter bear market territory, are we in a bear market or is this merely a violent correction? According to Argus research, bear markets that go way past 20% tend to be associated with “secular transitions,” things like the excessive valuations of the bubble. Near-bear markets, however, are more common around technology transitions or one-time disruptions. The one taking place now is perplexingly occurring next to high consumer and small business confidence, solid industrial activity and low interest rate and energy inputs.

There is another silver lining to the current constant whiplash: even in a worst case scenario,"only" half of the 14 bear markets that took place since World War II occurred during a prolonged economic contraction, LPL Research showed. Sell-offs when the economy contracts are bad, see the S&P falling 37% on average. The ones that come when growth is positive level off at 24%.

“In the end, the largest market corrections take place during recessions. Will we have a recession in 2019? We don’t think so,” LPL's traditionally cheerful Ryan Detrick told clients. "The bottom line is that you can have bear markets without a recession."

Which, of course, is bad news if the violent rally of the past two days is indeed only due to a massive pension reallocation trade, as the "bad" kind of bear market lasts an average of 556 days and is much worse than 20%, according to Argus. The mean peak-to-trough decline during recent bear markets has been around 35%.

Alternatively, if stocks are indeed trying to find a bottom and can reverse their recent downtrend, the current "bearish duration" would be short, at less than 90 days.

Until we know for sure, better strap in... or is that strap on?

Published:12/27/2018 5:13:37 PM
[Entertainment] 90 Day Fiancé's Jon and Rachel Take Us Behind the Scenes of Their Romantic Reunion 90 Day Fiance90 Day Fiancé's Jon and Rachel Walters finally reunited after spending months apart. For nearly two weeks, Jon and Rachel were able to fully enjoy married life after living on...
Published:12/27/2018 4:42:46 PM
[Markets] Why Bitcoin, Ethereum, & The Entire Crypto Market Are Down In Value

Authored by Andrew Romans via,

The way I see it, investors in 2017 - and specifically in Q4 - wanted to buy Bitcoin (BTC) and Ethereum (ETH) for the sole purpose of exchanging it for specific ICO tokens they wanted to invest in. The buyers of Bitcoin and Ethereum did not want to own Bitcoin or Ethereum. They wanted to buy the newly issued initial coin offering (ICO) tokens, but they needed to buy Bitcoin and Ethereum as a short way to get what they ultimately wanted. The owners of Bitcoin and Ethereum did not want to sell. They were watching the price of their holdings increase, so why would they? They were also believers in Bitcoin and Ethereum. So, in a “bid-ask world,” the price went up.

image courtesy of CoinTelegraph

Then, those startup companies that completed their ICOs became whales, which began — as a group — to unload their tokens in December and January, thereby flipping the dynamic of the huge demand for Bitcoin and Ethereum to all sellers of Bitcoin and Ethereum. After the New Year’s hangover faded, the startups needed to exchange their crypto for fiat in order to pay engineers and build their startups.

Then, it was a run-on-the-bank panic. Pressure from the United States regulators in Q3 and Q4 of 2017 resulted in a slowing and near total halt of ICOs by early 2018. After that, ICOs either stopped or radically slowed. New token issuers began to accept fiat without the need to pass through Ethereum, which killed more demand and left only sellers and “hodlers” and no buyers. In a “bid-ask world,” the market tanked. An interesting dynamic of the current market is that the prices of all cryptocurrencies are highly correlated to each other. Just look at the price of any token on CoinMarketCap, and you will notice a perfect correlation among the prices of most of them. Bitcoin and Ethereum go up and down together, and most other tokens are correlated in the same way. It shouldn’t be that way, but without any banks analyzing and reporting on these startups — the way they do for AppleAmazonMicrosoft, etc. — that’s the way it is for now. So, Bitcoin can raise or drop the price of your token, but it now appears that gravitational pull works in both directions.

In 2018, something else developed. It became clear that all of these funded ICOs were not diligenced by real tech experienced angels or VCs — they were mostly not tokens you would really want to invest into. Previously, all of these coins were correlated to the rising price of Bitcoin and Ethereum, but now it is dragging them down. They are all correlated, and the big section of the overall market cap is sinking the ‘crypto ship’ in general.

image courtesy of CoinTelegraph

What will happen is that all of these weak startups will eventually be flushed out, and we will be left with some decent and even amazing companies. Today, the consumer retail investors of Southeast Asia and around the world are no longer gambling and throwing cash at the latest ICO to pitch at some blockchain event — or at least not at the volumes of Q4 2017. It used to be 20 percent institutional (VC) investors and 80 percent retail. Now, it's 80 percent institutional investors, if not more. It makes sense to me that, if strongly branded VCs like a16z, Pantera Capital and 7BC.VC invest into a startup from their wide funnel of investments after conducting VC-grade due diligence, consumer retail investors will want to invest — following the VC's lead in jurisdictions where this complies with local securities law (or, in the U.S., if the startup filed an S1, Reg A+, etc.).

Now is the time for the arrival of experienced VCs to raise real VC funds, generate large volumes of deal flow, process that deal flow with fully centralized and decentralized teams qualified to conduct proper due diligence, fund the best ones, as well as help these portfolio companies execute and manage investor risk via diversification and portfolio construction. We have seen a return to sane equity funding — and not just for tokens. Investors now own equity and tokens. Some “pure play” decentralized cases require only tokens — but again with real, old-school due diligence — before just throwing money around. We are also seeing a return to market valuations, rather than a team of high school dropouts seeking a $50 million or $100 million pre-money valuation without ever having met a payroll or accomplish any substance prior to getting that kind of valuation.

The new companies to be funded in 2019 - and to be listed in 2019, 2020 and 2021 - will be far better on average than the 2017 cohort, resulting in a rebound in the market. Experienced VC-backed entrepreneurs are now working on blockchain startups, which means the population of management teams has evolved beyond the original Bitcoin anarchists.

Bitcoin itself is resilient, proven by its survival of multiple Mt. Gox-type events and numerous up-and-down cycles. The long-term curve for Bitcoin is up and to the right. After the infamous coins run out of cash and disappear, the market will become much more robust. Many of the managers became delusional due to their experience of traveling the world and completing their ICOs, thinking that BTC and ETH would only go up and up while failing to exchange enough of their crypto for fiat. Not only did they have startup risk, but they foolishly added FX (foreign exchange) risk.

So, the good news is that these weak, never-should-have-been-funded startups will run out of cash sooner than expected, because their crypto is worthless when converted to fiat than they thought at the time they completed their financings. The flushing out of these coins currently weakening the market will drive the market up. Today, startups exchange their crypto into fiat the moment they get it.

image courtesy of CoinTelegraph

I also predict that we will see a few killer startups take off and generate mass adoption, which will bring mainstream users into the crypto world and — in a gravitationally correlated world — this will lift the tide of the entire market. We will probably see some video game become a huge sensation — like Angry Birds — or something that will drive the adoption of a token. I expect to see something else come along that no one ever thought of — like Skype — that everyone begins to use, which will pull huge populations into the crypto world, as the value will just simply be there.

It is imperative that all businesses move onto the blockchain so that no party can tamper with the numbers of how many “widgets” were sold or with who gets paid what. All business, government and health care data should be on the blockchain — and pretty soon, it will be unacceptable without it to enter into a business agreement and trust the other party to tell you how many widgets were sold in China, the U.S. or Africa. Once these business transactions or elections are on the blockchain and no one can tamper with the data, all sides can trust each other. The big picture here is that the market will see a major rally and long-term trend up and to the right.

2019 might be an excellent time to invest in a blockchain-focused VC fund or invest into blockchain startups taking on-board lessons from top-performing VCs that have a strong entrepreneur-experienced investment team with experience in achieving top-quartile venture capital IRR performance and cash-on-cash performance.

Published:12/27/2018 4:42:46 PM
[Markets] Kevin Hassett: Trump-Powell Meeting Would Be "A Very Favorable Thing"

Mere minutes after stocks staged the biggest reversal since 2010 to build on Wednesday's historic rebound (a rebound that many attributed to Kevin Hassett's assurances that Fed Chairman Jerome Powell's jobs was "100% safe"), the White House economic advisor was back on Fox Business Thursday afternoon to reprise his role as the last remaining WH official with any credibility in the eyes of the market.

Hassett, the chairman of the White House Council of Economic Advisers, said that while he has no first-hand knowledge of plans for a meeting between Trump and Powell (speculation has intensified since WSJ reported yesterday that Powell would be "open" to such a meeting), Hassett believes such a get together would be "very productive" and "a very favorable thing."


Both Powell and Trump are "great guys" who would "get along" if they could only meet up and talk through their issues.

"I’ve not been involved in those discussions but I can say that I think that if they did meet it would be a very favorable thing," Hassett said during the interview. "The two of them are great guys that would get along if they were to meet and talk things through and the president loves to listen to reason, to arguments, to analysis, and Jay does too. So I think they would have a very productive dinner were they to meet."

Trump continued his attacks on the Fed this week, tweeting on Christmas Eve after the worst pre-Christmas session in history that "the only problem our economy has is the Fed. They don’t have a feel for the Market, they don’t understand necessary Trade Wars or Strong Dollars or even Democrat Shutdowns over Borders."

But as we pointed out earlier this week, while the Fed is to blame for the market carnage, it's not for the reasons Trump thinks. By dropping interest rates to zero and aggressively expanding its balance sheet, the Fed created what campaign-era Trump once decried as a "big fat ugly bubble."

Then again, even if a meeting between Trump and Powell goes south, how long would it take the market to switch gears and realize that getting rid of the hawkish Fed chairman might possibly be a good thing (for asset prices, that is)? 

Published:12/27/2018 4:13:58 PM
[World] Jake Gyllenhaal and Jeanne Cadieu Enjoy a Cozy Stroll in Paris Jake Gyllenhaal, Jeanne CadieuIt looks like Jake Gyllenhaal has a special lady on his arm. The Oscar-nominated actor was spotted by photographers out on a stroll in Paris on Wednesday. However, the star was not alone...
Published:12/27/2018 3:41:12 PM
[Markets] "Everything Is Fake": Ex-Reddit CEO Confirms Internet Traffic Metrics Are Bullshit

"It's all true: Everything is fake," tweeted Former Reddit CEO Ellen Pao regarding a Wednesday New York Magazine article which reveals that internet traffic metrics from some of the largest tech companies are overstated or fabricated. In other words; they're bullshit. 

Pao was responding to a tweet by the Washington Post's Aram Zucker-Schariff, quoting the following segment of the article: 

The metrics are fake.

Take something as seemingly simple as how we measure web traffic. Metrics should be the most real thing on the internet: They are countable, trackable, and verifiable, and their existence undergirds the advertising business that drives our biggest social and search platforms. Yet not even Facebook, the world’s greatest data–gathering organization, seems able to produce genuine figures. In October, small advertisers filed suit against the social-media giant, accusing it of covering up, for a year, its significant overstatements of the time users spent watching videos on the platform (by 60 to 80?percent, Facebook says; by 150 to 900 percent, the plaintiffs say). According to an exhaustive list at MarketingLand, over the past two years Facebook has admitted to misreporting the reach of posts on Facebook Pages (in two different ways), the rate at which viewers complete ad videos, the average time spent reading its “Instant Articles,” the amount of referral traffic from Facebook to external websites, the number of views that videos received via Facebook’s mobile site, and the number of video views in Instant Articles.

Can we still trust the metrics? After the Inversion, what’s the point? Even when we put our faith in their accuracy, there’s something not quite real about them: My favorite statistic this year was Facebook’s claim that 75 million people watched at least a minute of Facebook Watch videos every day — though, as Facebook admitted, the 60 seconds in that one minute didn’t need to be watched consecutively. Real videos, real people, fake minutes. -NYMag

"It's all true: Everything is fake," tweeted Pao, adding "Also mobile user counts are fake. No one has figured out how to count logged-out mobile users, as I learned at reddit. Every time someone switches cell towers, it looks like another user and inflates company user metrics." 

The New York Magazine article by Max Read goes much deeper, however, asserting; "The people are fake" , "The businesses are fake" , "The content is fake" , "Our politics are fake," and finally "We ourselves are fake."

Tell us how you really feel Max! 

For starters Read notes that "Studies generally suggest that, year after year, less than 60 percent of web traffic is human." Some years, "a healthy majority of it is bot." In fact, half of all YouTube traffic in 2013 was bots according to the Times

The internet has always played host in its dark corners to schools of catfish and embassies of Nigerian princes, but that darkness now pervades its every aspect: Everything that once seemed definitively and unquestionably real now seems slightly fake; everything that once seemed slightly fake now has the power and presence of the real-NYMag

Also of interest, the Times found in their August investigation that there is a flourishing business buying clicks. In fact, one can buy 5,000 video clicks in 30-second increments - for as little as $15, with the traffic typically coming from bots or "click farms." 

So what constitutes "real" traffic, Read asks? 

If a Russian troll using a Brazilian man’s photograph to masquerade as an American Trump supporter watches a video on Facebook, is that view “real”? Not only do we have bots masquerading as humans and humans masquerading as other humans, but also sometimes humans masquerading as bots, pretending to be “artificial-intelligence personal assistants,” like Facebook’s “M,” in order to help tech companies appear to possess cutting-edge AI. We even have whatever CGI Instagram influencer Lil Miquela is: a fake human with a real body, a fake face, and real influence -NYMag

Read the rest here - including Max Read's thoughts on navigating a world of "deep fakes," bullshit propaganda which purports to "redpill" people to the "truth" of everything, and how utterly fake people have become. 

Published:12/27/2018 3:41:12 PM
[Markets] 4th Biggest Buy Program Of All Time Sends Dow Soaring Over 900 Points

Dow futures plunged over 760 points after tagging yesterday's highs overnight, but those darn algos ripped the market higher in the last hour erasing the entire drop...  with the biggest buy program since February...

And the 4th biggest buy program of all time...

In words...

And pictures... Dow futs exploded over 900 points higher, taking out yesterday's highs and ending like yesterday at the highs of the day...


On the day, Small Caps ended red but The Dow led the rest green...


Quite a wild ride this week so far...

The plunge was not a total surprise after economic confidence crumbled and job expectations crashed, but the buying panic had the same short squeeze and pension panic reallocation fingerprints from yesterday.

However, gold and bonds remain green since the Fed hike and stocks still down over 4%...


It certainly has the smell of a massive pension reallocation as the moment stocks started to surge, bonds were dumped...


Especially the long-end as pensions unwound as much duration as quickly as possible to cover the increased equity exposure...


While the USD and stocks were correlated today, the former plunged and was unable to rip back with the magnitude of stocks...

In fact the usd fell well short...

Dollar weakness helped lift Silver again as crude slipped...


Silver has dramatically outperformed gold in the last few days...


But finally, no matter how much lipstick they put on December, it is still a pig...

Published:12/27/2018 3:12:26 PM
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Published:12/27/2018 2:44:51 PM
[Markets] Americans Just Blew $850 Billion On Xmas But Here's Why That's Not A Good Sign

Authored by Daisy Luther via The Organic Prepper blog,

The preliminary numbers are in and it appears that Americans exceeded last year’s shopping frenzy with an even more extravagant one this year. Mastercard says that spending was up 5.1%over last Christmas, which brings us to an astronomical $850 billion spent between November 1st and Christmas Eve.

Of these shopping sprees, online sales increased by nearly 20%, which means that we could soon see another wave of brick and mortar closures, just like last year. Amazon pretty much owned Christmas, with a “record-breaking” holiday season, reporting one billion items delivered for free.

Three times as many purchases this year were handled by Alexa, too, which means buyers didn’t even have to type in a credit card number.  “Alexa, find me a bankruptcy attorney.”

So, even though Americans blew through $850 billion dollars at Christmas, this may not actually mean that the economy is on the upswing. All the problems there before the holiday didn’t just go away.

All this spending is good news for the economy, right?


Before you get too excited thinking that all the negative predictions are just hogwash, Zero Hedge puts the spending binge into alarming but unsurprising perspective.

But though analysts might be tempted to cite holiday spending as an example that consumption is stronger than the hard and soft data would suggest, and that the mighty US consumer just might come through and save the US economy from a late-2019 or early-2020 recession, there is one thing to consider: As the latest raft of spending data revealed, spending outpaced incomes once again in November, sending the savings rate lower, suggesting that this latest consumption binge was largely fueled by debt.

In other words, analysts who interpreted these strong holiday sales as one last binge before the end of the business cycle might soon be vindicated. (source)

So, in reality, what seems like a bunch of prosperous people going out and treating their families to well-deserved gifts and holiday joy is just the opposite. This Christmas was most likely an example of people who couldn’t afford to spend saying, “to heck with it” and maxing out credit cards that they may never be able to pay off.

All of those problems from before Christmas didn’t just disappear.

Right before the holiday, I wrote an unpleasant article about 8 worrisome signs for our economy. These things didn’t magically disappear because it was Christmas and people blew their budgets. After the article, the stock market plunged even further, making it the absolute worst Christmas Eve in market history. We’re talking Great Depression-era lows.

What’s more…and this should keep you up at night…President Trump had Treasury Sec. Steve Mnuchin summon heads of the 6 largest banks in the country for emergency calls on Christmas Eve.

Brian Moynihan of Bank of America, Michael Corbat of Citigroup, David Solomon of Goldman Sachs, JPMorgan’s Jamie Dimon, James Gorman of Morgan Stanley, and Tim Sloan of Wells Fargo were all contacted.

According to The Street, it’s all good and there’s no need to worry.

U.S. Treasury Secretary Steven Mnuchin said Sunday that he held individual calls with CEOs of the nation’s six largest banks, all of whom said their institutions had ample liquidity for lending to consumers, businesses and all other market operations despite the recent market turmoil.

The unusual statement, issued via the Treasury Department’s verified Twitter feed, also noted that Mnuchin would chair a meeting of the President’s Working Group on Financial Markets, which includes the Board of Governors of the Federal Reserve system, the Securities and Exchange Commission and the Commodities and Futures Trading Commission.

“We continue to see strong economic growth in the U.S. economy, with robust activity from consumers and business,” Mnuchin said in a statement. “With the government shutdown, Treasury will have critical employees to maintain its core operations at Fiscal Services, IRS and other critical functions within the department.” (source)

Mnuchin says everything is just fine but his statement actually made people more concerned than they were in the first place.

This conciliatory statement just made everything worse.

After Mnuchin’s confirmation of ample liquidity, the reactions went something like this:

To which, the collective response from the whole world seemed to be: “Wait, who said anything about not having ample liquidity?”

Mnuchin also said that the major banks “have not experienced any clearance or margin issues and that the markets continue to function properly.” Again, since few expected otherwise, the “clarification” from Mnuchin only seemed to sow more fear and confusion.

Mnuchin was scheduled to hold another call with the President’s Working Group on financial markets – commonly referred to as the “Plunge Protection Team” – which includes the Board of Governors of the Federal Reserve System, the Securities and Exchange Commission, and the Commodities Futures Trading Commission. He said that the FDIC and the Comptroller of the Currency might participate as well. “These key regulators will discuss coordination efforts to assure normal market operations,” Mnuchin’s statement said.

The curious statement intended to reassure the markets prompted the opposite response. “This is the type of announcement that raises the question of whether Treasury sees problems that the rest of the market is missing,” Cowen & Co. analyst Jaret Seiberg wrote in a note to clients. “Not only did he consult with the biggest banks, but he is talking to all of the financial regulators on Christmas Eve. We do not see this type of announcement as constructive.” (source)

Now, people in the know who may not have been particularly concerned have questions. Lots of questions.

President Trump’s Christmas message was certainly not uplifting.

The holiday greeting from the President included a few words about his displeasure with the Fed. Not only did he say he lacked confidence in Fed Chairman Jerome Powell, but he had a few other choice words about the increase in interest rates.

“They’re raising interest rates too fast, that’s my opinion. I shouldn’t have confidence. They’re raising rates too fast because they think the economy is so good. But I think they will get it pretty soon. I really do,” Trump said, a day after the Dow lost more than 650 points and fell 2.9 percent — the worst Christmas Eve performance ever.

“I mean, the fact is that the economy is doing so well that they raised interest rates and. President Obama had a very low-interest rate. We have a normalized interest rate, a normalized interest rate, it’s good for a lot of people. They have money in the bank, they get interest on their money,” he said. (source)

Some economic pundits see the 7th rate increase since President Trump took office as a sign that the Fed is deliberately trying to crash the economy and show Trump who is truly in charge.

And all of this isn’t affecting only poor people. The richest folks in the world lost more than $550 billion in 2018. Of course, it isn’t going to affect them like a similar percentage of wealth will affect us normies, but it’s still a startling sign of economic changes.

Things aren’t looking good today.

And as far as this morning goes, things are NOT looking up in the markets on the day after Christmas. Markets in Europe seem to be bracing themselves for upheaval today and stocks in China have already fallen. Bloomberg reports that US Futures are also looking shaky.

Let’s cross our fingers that things pick up throughout the day.

The entire thing is psychological warfare, according to Brandon Smith of Alt-Market.

…the goal of economic subversion is to break down the human mind and change it into something else; something less human or, at the very least, something less rebellious. One can only control people through debt and false rewards for so long before they start to recoil and revolt. Economic collapse, on the other hand, can change people fundamentally through persistent terror and through tragedy. Through trauma, the globalists hope to make men into monsters or robots.

The current system was never built to last. Our economy is designed to fail, yet few people seem to question why that is? They tell themselves that this is because greed has led the money elite to self-sabotage, but this is a fantasy. It is not just that the system is designed to fail, but that it is designed to fail according to an organized timetable. (source)

We’ve seen exactly this happening through the writings of our friend Jose, in the articles where he shares how the collapse of Venezuela went down. Actually, quite a few of the things that Smith writes about in his article can be clearly witnessed in the fall of Venezuela, right down to the replacement of the national currency with a government-controlled cryptocurrency.

What can you do?

This is the worst time possible to dig yourself further into debt. We’re on the brink of catastrophe unless a bunch of rabbits get pulled out of a bunch of hats. And even then, with the astronomical national debt, it would just be kicking the can a little bit further down the road, like paying off all your overdue Mastercard bills with your shiny new Visa.

My suggestions are this:

Find as many ways as possible to reduce your reliance on the system. I think we’re in for a bumpy 2019, but if I’m wrong, none of these recommendations is outrageous. In fact, all of them will increase your quality of life. So, what can it hurt to be ready?

Here’s hoping it will all be unnecessary.

Published:12/27/2018 2:13:01 PM
[Entertainment] Meet the America's Got Talent: The Champions Contestants America's Got Talent: The ChampionsDo you have a favorite act from America's Got Talent? Did a viral video from another country's Got Talent show make you a fan of a foreign act? Chances are, they're all going to battle...
Published:12/27/2018 2:13:00 PM
[Entertainment] Mrs. Doubtfire Child Star Lisa Jakub Turns 40: See the Cast Then and Now Mrs. DoubtfireWanna feel old? Last month marked the 25th anniversary of Mrs. Doubtfire and one of its child stars, Lisa Jakub, just turned 40. The actress was 14 years old when she played the...
Published:12/27/2018 1:43:09 PM
[Markets] Vanadium Skyrockets After China Shocks Market With New Regulations

The global scramble for a little known metal called vanadium is officially underway.

The metal, which when used in small amounts can help strengthen steel significantly, is in high demand following new Chinese regulations on infrastructure and buildings. The new rules, which came as a result of a 2008 earthquake that devastated part of China, are aiming to phase out the use of low strength steel in building projects, according to the Wall Street Journal.

The market for the metal is very small, with about 80,000 metric tons produced each year. Roughly 90% of that is used in small amounts in projects like bridges and skyscrapers. While two years ago it cost less than $5 per pound, it surged as high is $29 per pound last month.

Supply of vanadium globally has been "drawn down to nearly nothing,” according to Jack Bedder, director at a London-based research and consulting firm.

The new Chinese regulations set out specifications for three high-strength grades of steel that each require vanadium. While many of the miners of this metal have been shut down, the surge in pricing is reinvigorating the interests of numerous companies. Macquarie group said that global demand for the metal could be up 25% in coming years.

About 14% of the world's vanadium comes directly from mines and it is usually found along side of minerals like iron ore, coal and aluminum. It’s relatively abundant but it hasn’t been mined on its own because prices have been too low to make it worth it. As a result, the new boom has brought in smaller miners that are setting up next to major mines, like Energy Fuels' Utah mill.

Curtis Moore, vice president of marketing and corporate development at Lakewood, Colorado's Energy Fuels Inc., stated: “It’s hard to say whether we will have enough capacity to bring in other miners. Certainly we are open to it.”

The surge is also helping fuel and re-energize mining projects worldwide. At Energy Fuels, Inc., they plan to start collecting discarded vanadium from its mill in Utah. In addition to this, the miner is also going to be revisiting old mines that it has already shut down, but that also likely contain significant amounts of the metal.

Additionally, Largo Resources Ltd. in Brazil is spitting out record volumes of the metal from its Maracás Menchen mine and is aiming to lift its production capacity by 25%. The company, based in Toronto, is considering adding to its infrastructure and placing a new facility near its mine simply to focus on vanadium them.

Mark Smith, Largo’s chief executive said: "The market needs new production in a big way."

Published:12/27/2018 1:43:05 PM
[Markets] Apple Lost $11 Billion Buying Back Its Own Stock In 2018

There's a funny thing about buybacks: when stocks are rising (and are therefore more expensive), companies have zero doubts  about repurchasing their own stock, especially if said purchase is funded with cheap debt. Of course, by repurchasing their stock, the price goes even higher making management's equity-linked comp more valuable, which explains why management teams usually have no misgivings about allocating capital to this most simplistic of corporate uses of funds. However, when stocks fall, companies tend to clam down on buybacks due to fears that the drop may continue, forcing the CFO or Treasurer to explain his actions to the CEO or the board, and why they risked losses on capital (as well as getting a pink slip) instead of investing in "safer" corporate strategies like M&A, R&D or capex.

The irony, of course, is that companies should not be buying back stocks when the stock is rising (as that's when it is more expensive), and accelerate repurchases when it is dumping. And yet, that virtually never happens in reality as management teams, like most investors and algos, tend to chase momentum and direction. Meanwhile, confused by underlying pricing mechanics, management - which is singlehandedly responsible for the levitation in the stock price with its buybacks - then watches its stock price tumble even more one stock repurchases are halted.

But the "funniest" moments are reserved for when companies spent tens of billions on stock repurchases then had the rug pulled under from under the market - and their stocks - resulting in billions in unbooked losses on invested capital.

And in 2018, there has been no company that has had a greater share of "funny" buyback moments than Apple, which as we reported recently, accounted for 24% of all buyback growth in the first half of 2018, a year that will go down in history books for a record $1+ trillion in stock repurchase announcements and over $700 billion in executed buybacks.

The reason is that having spent tens of billions on buying back its own stock, Apple - the year's most aggressive stock repurchaser - has lost more than $9 billion this year on an underperforming investment: its own stock.

Like many large companies, Apple has used much of its windfall from 2017 tax reform to buyback shares. But, as so often happens, the recent plunge in stock prices has made that look like a bad idea. Apple and companies including Wells Fargo, Citigroup and Applied Materials repurchased their own shares at near record prices, only to see their value decline sharply.

In effect, the WSJ notes, "the market has told them they overpaid by billions of dollars." And nobody has been hit more by the plunge in overvalued Apple stock than Apple itself (and perhaps Warren Buffett).

While buyback advocates and companies contend that buybacks are a good way to return excess capital to shareholders and that the paper losses can reverse themselves if their stocks rebound, those advocates are clearly unfamiliar with the rise and fall - literally - of IBM stock in the period when the company would buy back its stock, and then after it no longer could as it had accumulated too much debt; additionally the sharp stock declines call into question their decision to devote so much of their tax savings to buybacks, rather than using it to invest in their businesses, raise employee pay or pay higher dividends.

"If they made an acquisition that decreased in value this much, people would be up in arms," Nell Minow, vice chairwoman of ValueEdge Advisors, told the WSJ. "They have one job, and that is to make good use of capital."

And, with a handful of exceptions, few companies have made worse use of capital than those who spent billions and billions on repurchasing their own stock this year: indeed, when the market was riding high, companies bought back shares at a furious pace, juiced by the tax savings they reaped from the December 2017 passage of the Tax Cuts and Jobs Act. The law enriched companies by slashing the corporate tax rate to 21% from 35% and making it easier for firms such as Apple to shift foreign earnings to the U.S.

S&P 500 companies bought back $583.4 billion worth of their own shares in the first nine months of 2018, according to S&P Dow Jones Indices, up 52.6% from the same period in 2017. As a result, nearly 18% of S&P 500 companies reduced their share counts by at least 4% year-over-year, according to S&P Dow Jones Indices.

Apple, having lost its vision to create "must have" gizmos and picking financial engineering instead, spent $62.9 billion on buybacks in the first nine months of 2018, according to securities filings.

But the subsequent selloff has pummeled its shares, and as a result the company’s repurchased shares were worth about $51.8 billion as of Thursday's trading, some $11 billion less than it paid for them as Apple repurchased shares at monthly average prices as high as $222.07, according to securities filings. The stock was trading at $151.27 on Thursday.

Apple advocates were quick to defend the company:

Apple makes iPhones. Timing the market is not what they do,” said Howard Silverblatt, senior index analyst at S&P Dow Jones Indices. Companies that try to time the market in buying back shares “are going to be in the red at times.”

Still, with Apple promising to invest $30 billion in the US and create 20,000 US jobs over the next five years, that's $10 billion the company could have used toward said noble goal instead of providing a one-time transitory boost for its shareholders.

To be fair, it's not just Apple as some big banks have encountered the same issue. Wells Fargo spent about $13.3 billion on buybacks from January through September for shares now worth $10.6 billion, about $2.7 billion less than they paid. Citigroup spent $9.9 billion on buybacks in the nine-month period for shares now worth about $7.1 billion, about $2.8 billion less.

As the WSJ notes, both banks bought back some shares at monthly average prices that weren’t far below their 52-week highs, and both companies’ share prices have fallen well below those levels. Wells and Citigroup declined to comment, although it would be interesting to hear their thoughts on why they were buying back stock at multi-year highs instead of saving the dry powder for when the stocks dropped... Unless, of course, the stocks would never have been near 52 week highs if it weren't for the buybacks (spoiler alert: that's exactly the case).

Other tech companies were also sucked in by the siren song of rapid stock price appreciation and Applied Materials spent $4.5 billion for shares now worth $2.7 billion—about $1.8 billion less. The stock has declined 40% this year. Applied Materials bought back many of its shares for prices above $50; the stock closed Wednesday at $30.64.

And as noted above, now that the market is sliding and many of these stocks are tumbling, management teams have suddenly stopped repurchasing shares. Furthermore, while it is possible some companies may take advantage of the currently beaten-down prices to buy back more shares, many companies are heading into their pre-earnings blackout period, when they can’t buy back stock because they know what their forthcoming quarterly earnings will look like.

And companies remain nervous about the volatility in stock prices, Mr. Silverblatt said. “It’s hard to fight the market."

In other words, the math is simple: corporate buybacks are no better timers than the average retail investor who buys near the all time high, and then sit quietly when the stock is tumbling and they should be buying.

But the bigger question is whether Apple has been shamed enough into halting buybacks for good. If so, watch out for the news that Warren Buffett has sold his entire investment, which he only made expecting to frontrun AAPL management... exactly the same reason why he bought IBM when he did, and why he dumped it at a major loss a few years later when IBM management made it clear it was done spending billions on stock repurchases.

Published:12/27/2018 1:11:07 PM
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Published:12/27/2018 12:42:34 PM
[Markets] The ECB’s Quantitative Easing Was a Failure, Here Is What It Actually Did

Submitted by Daniel Lacalle, via

The main reason why the ECB quantitative easing program has failed is that it started from a wrong diagnosis of the eurozone’s problem. That the European problem was a demand and liquidity issue, not due to years of excess.

The ECB had been receiving tremendous pressure from banks and governments to implement a similar program to the US’ quantitative easing, forgetting that the eurozone had been under a chain of government stimuli since 2009 and that the problem of the euro-zone was not liquidity, but an interventionist model.

The day that the ECB launched its quantitative easing program, excess liquidity stood at 125 billion euro. Since then it has ballooned to 1.8 trillion euro.

“Only” after 2.6 trillion euro purchase program and ultra-low rates.

Eurozone PMIs are atrocious. The euro-zone index falls from 52.7 in November to 51.3 in December, well below the consensus forecast of 52.8. More importantly, France’s PMI plummeted from 54.2 in November to a 34-month low of 49.3.

Unemployment in the euro-zone, at 8%, is double that of the US and comparable economies. Youth unemployment rate remains at 15%.

Economic surprise has plummeted as the ECB balance sheet reached 41% of GDP (vs 21% of the Fed).

More than 900 billion euro of non-performing loans remain in the banking system, which keeps a trillion euro timebomb in its balance sheets (read). A figure that represents 5.1% of total loans compared to 1.5% in the US or Japan.

Deficit spending is rising. Government debt to GDP has risen to 86.8%.

The number of zombie companies -those that cannot pay interest expenses with operating profits- has soared to more than 9% of all large quoted firms, according to the BIS.

Sovereign states have saved around one trillion euro in interest expenses, but have spent all those savings. Today, almost no eurozone country can absorb a modest rise in interest rates, and Italy, Spain, France, Portugal, Slovenia, and others are demanding more spending and more deficits.

There is no real secondary market demand for eurozone sovereign bonds at these yields. At the peak of its quantitative easing program, the Federal Reserve was never the sole buyer of Treasuries. There was always a relative secondary market. In the Eurozone, the ECB has been 7 seven times the net issuances of sovereigns. No investor is likely to buy eurozone sovereign bonds at these yields once the ECB steps down.

Eurozone growth and inflation estimates have been revised down again in December. Industrial production has fallen sharply.

Trichet, the ECB’s predecessor to Mario Draghi, had lowered interest rates from 5% to 1%, injected billions into the economy, buying sovereign bonds in 2011.

What has the ECB been successful at?

  • Keeping the euro alive. Not a small success, by the way. The risk of break-up has been contained but not eliminated.
  • Maintaining government spending at low rates. However, at the expense of savers and salaries.
  • Generating a sense of euphoria in financial markets, with high yield and sovereign bonds soaring.
  • Wages in the euro-zone have increased below inflation since QE launched and into the third quarter of 2018. In fact, low inflation has been the biggest unintended success of the ECB. It could have been worse.
  • The biggest “success” of the ECB has been the massive bailout of governments at the expense of savers.

We also have to agree that Mario Draghi has been reminding governments that they needed to implement structural reforms, use the period of low rates to deleverage and repeating constantly that monetary policy will not work without reforms. No one listened. It was party time, and cheap money attracts bad decisions.

A Never-Ending Government Stimulus

With public spending averaging over 46% of GDP, an annual deficit of over 1.7% on average, and 86% debt, talking about austerity is like eating a box of cakes and calling it “diet”.

The tax burden in this period has been raised throughout the EU (with honorable exceptions, such as Ireland) with an average tax wedge of 45% for workers and 40% on companies.

The United States, at the peak of the crisis, spent 43% of GDP (the EU, 50%) and dropped it to 34%, and that with 21% of the budget in 2009 dedicated to defense.

The EU has been a Keynesian stimulus machine before, through and after the crisis.

1) A massive stimulus in 2008 in a “growth and employment plan”. A stimulus of 1.5% of GDP to create “millions of jobs in infrastructure, civil works, interconnections and strategic sectors”. 4.5 million jobs were destroyed and the deficit nearly doubled.

Between 2001 and 2008, money supply in the euro-zone doubled.

2) Two massive sovereign bond repurchase programs with Trichet as ECB President, interest rates down from 4.25% to 1% since 2008. Poor Trichet. Trichet purchased more than 115 billion euros in sovereign bonds.

3) An additional mega stimulus from the ECB, in addition to the TLTRO liquidity programs with Draghi, which has taken sovereign bonds to the lowest yields in history and purchased almost 20% of the total debt of some major states.

The problem of the European Union has never been a lack of stimuli, but an excess of them.

As government expenditure and unproductive investments multiplied, overcapacity remains at levels of 20% and the constant errors of interventionism leave the euro-zone after the biggest monetary experiment in its history with the same high tax wedge and obstacles to the productive sectors.

The end of the ECB QE leaves the euro-zone in a weaker position than it was in 2011. Because fiscal space has been exhausted and the ECB, with its balance sheet at 41% of the euro-zone GDP and ultra-low interest rates, has also exhausted its monetary tools.

The end of QE does not just show the failure of the ECB’s policy. It highlights the failure of governments’ economic policies.

Governments should implement growth-oriented reforms lowering taxes and attracting capital. Many will not. Most will likely decide, again, that they need to spend more. Fail, repeat.

Published:12/27/2018 12:42:34 PM
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Published:12/27/2018 12:12:44 PM
[Markets] Nomura Updates Its "Nightmare" Chart

One week ago, ahead of an especially violent selloff in the stock market - and yesterday's historic rally - Nomura's head of cross-asset strategy Charlie McElligott showed what has been dubbed a "nightmare" (or "forced goalseeking" according to some) chart, according to which plotting the current selloff since the Sept 20 high, and screening back to 1929, yields the highest correlation to the 2007/2008 selloff period:

The current cumulative SPX return from Sep 20th ‘til now looks shockingly like the SPX 1Y return profile from Oct 9th 2007 through Oct 3rd 2008—yikes.

Fast forward to today when Wall Street is gripped in debate whether yesterday's 5% spike in the S&P was merely a particularly violent short squeeze-cum-bear market rally, or it signified the end of the current correction/bear market (depending on how one counts the last S&P prints on Monday's rout).

And while McElligott can't answer that particular question, which can only find a response in hindsight, the Nomura strategist has shared an updated chart of the current selloff to the Oct. 2007/2008 bear market analog so readers can get a sense of what may happen next if this is indeed just the start of the first bear market in the past 10 years. It is shown below.



Published:12/27/2018 11:40:52 AM
[World] [David Kopel] Do Some Courts Underenforce the Second Amendment?

Data show problems in several Circuits

This Fall, the Duke Law Journal held a symposium Heller at Ten: A Symposium on From Theory to Doctrine. All of the articles are, at least partially, responses to an article Eric Ruben and Joseph Blocher that analyzed data for all post-Heller cases, from 2008 until early 2016. From Theory to Doctrine: An Empirical Analysis of the Right to Keep and Bear Arms After Heller, 67 Duke L.J. 1433 (2018). Examining data from 1,153 cases, Ruben and Blocher presented a wealth of interesting findings. For example: pro se plaintiffs rarely succeed; Second Amendment claims have a better chance of success claims in civil cases than in criminal ones; and lower courts rarely use historical sources (only 29 from before 1791, and only 42 from 1791-1868).

All of the response articles, including mine, praised the Ruben & Blocher article, and deservedly so. It is a major contribution to the scholarly literature.

My article, Data Indicate Second Amendment Underenforcement, did take issue with Ruben & Blocher's claim that their data prove that the Second Amendment is not underenforced in the lower courts. First of all, Ruben & Blocher have a broad definition of "success," which includes winning on a preliminary motion. So if a plaintiff defeats a motion to dismiss, and later loses on the merits, Ruben & Blocher score the MTD decision as a Second Amendment success. With this broad definition, they find that Second Amendment claimaints succeed 12% of the time, and therefore there is no underenforcement problem. Ruben & Blocher code ten cases collectively from the Second, Fourth, and Ninth Circuits as Second Amendment successes. Yet only a single one of those cases involved a final decision on the merits.

According to Ruben and Blocher, the highest rate of Second Amendment successes have come in right to carry cases. Indeed, the Seventh Circuit, the Illinois Supreme Court, and the D.C. Circuit have all struck laws that prohibited the vast majority of law-abiding adults from carrying handguns for lawful protection. Illinois and D.C. now have fair systems for adults to obtain carry permits after passing safety training and background checks. Yet decisions in other jurisdictions have nullified the right to bear arms in three states or allowed nullification by local governments in part of five more states. When the exercise of a constitutional right is prohibited for tens of millions of Americans, that does indicate an underenforcement problem in at least some jurisdictions.

Ruben & Blocher's datacentric article was not meant to analyze doctrine. But when one does look at doctrine, underenforcement (indeed, nullifcation) becomes apparent in some courts. Contrary to Heller, the Second Circuit uses rational basis in some Second Amendment cases. When the Second Circuit does apply heightened scrutiny, the court examines the sufficiency of the government's evidence, but does not examine whether the other party has rebutted that government evidence.

When applying intermediate scrutiny, some courts do apply the standard rules, such as considering whether there are substantially less burdensome alternatives to the regulation at issue. But some, including the Second Circuit, skip this part of intermediate scrutiny when the Second Amendment is involved.

Other articles in the symposium were by Michael Dorf (pondering former Justice Stevens' proposal to repeal the Second Amendment); Sanford Levinson (criticizing the Supreme Court's "Sphinx-like inscrutability" on important post-Heller issues, including the federal ban on arms possession by illegal aliens); Darrell A.H. Miller (noting the reluctance of lower courts to use originalist methodology); George Mocsary (critiquing the claim that there is no underenforcement problem; noting much lower win rates under heightened scrutiny Second Amendment contexts than for other rights); Adam M. Samaha & Roy Germano (presenting their own study showing that judges vote in favor of gun rights claims at a far lower rate than they vote for other rights: commercial speech, Establishment Clause, anti-affirmitive action, and abortion rights); and Ronald F. Wright & Mark A. Hall (praising Ruben & Blocher's datacentric methodology).

Published:12/27/2018 10:13:07 AM
[Markets] "No End To Shutdown In Sight" As Trump Promises "Whatever It Takes" To Fund The Wall

During a surprise visit with US troops in Iraq on Wednesday, President Trump offered his own spin on Mario Draghi's famous "whatever it takes" line when asked about what it would take to break the impasse and deliver a funding bill to end the partial government shutdown, which entered its sixth day on Thursday.


Illustrating just how difficult it might be for Trump to work out a compromise, Democratic leader Nancy Pelosi said yesterday that she would work to pass a funding bill similar to one passed by the Senate last month that doesn't include the $5 billion in wall funding (instead, they're standing by their offer of $1.3 billion) - though it's unlikely that the president will sign it, or that both chambers can muster the supermajority needed to override the president's veto.

"Whatever it takes," Trump said. "I mean, we're gonna have a wall. We're gonna have safety. We need safety for our country."

Senate and the House of Representatives were set to meet at 4 pm EST on the sixth day of the shutdown and resume debating ways to end it. That will include Senate consideration of a measure already approved by the Republican-controlled House that meets Trump’s wall-funding demand.

In his latest tweet bashing Democrats for placing politics above security, Trump referenced the fact that the bureaucracy has a well-known Democratic bias by reminding Democrats that "most of the people not getting paid" are Democrats.

To be sure, as Reuters explains, most of the federal government, which directly employs almost 4 million people, is unaffected by the shutdown. The Defense, Energy, Labor and other departments are funded through Sept. 30 of next year. And even agencies that are affected never totally close, with workers deemed "essential" still performing their duties. "Non-essential" federal workers at unfunded agencies will remain on furlough and staying home. Both they and essential employees will not get paychecks after December until the shutdown ends. The 435-seat House was also set to reopen on Thursday.

Here's a run down of where the budget standoff stands (courtesy of Bloomberg):

  • After weeks of failed talks between Trump and congressional leaders, parts of the U.S. government shut down on Saturday, affecting about 800,000 employees of the Departments of Homeland Security, Justice, Agriculture, Commerce and other agencies.
  • Analysts are still largely projecting that the shutdown drama will last until well into January.
  • "We continue to believe that it is unlikely that Congress will come up with a deal to end the current partial shutdown until well into January," said financial firm Height Securities in a commentary note on Wednesday.

Here are the latest developments:

  • Trump said during the Iraq visit that the shutdown would last as long as it takes to get the funding he wants for the border wall and additional security.
  • The president declined to say what level of funding he’d accept.
  • Republicans said they were waiting for a counteroffer from Democrats to the proposal said to have been made by Vice President Mike Pence on Saturday of $2.1 billion for new border barriers, along with $400 million for other Trump immigration priorities.
  • Even with most lawmakers out of town, some discussions were taking place, according to congressional aides.
  • Trump is scheduled to return to Washington on Thursday.

These are the next steps...

  • Democratic leaders in the House and Senate have been negotiating with the Trump administration. Once they reach agreement, Senate Majority Leader Mitch McConnell said he’ll seek a vote on the deal.
  • If the shutdown lasts past Jan. 3, when Democrats take control of the House, Democratic leader Nancy Pelosi, who is in line to become speaker, said the chamber will pass a spending bill to reopen the government -- without money for a wall.

...And key takeaways:

  • The shutdown, which began Saturday, affects nine of 15 federal departments, dozens of agencies and hundreds of thousands of workers.
  • Among the departments without funding are: Justice, Homeland Security, Interior and Treasury. Independent agencies, including the Securities and Exchange Commission, are also affected.
  • The departments whose funding lapsed represent about a quarter of the $1.24 trillion in government discretionary spending for fiscal year 2019.
  • An estimated 400,000 federal employees will work without pay and 350,000 will now be furloughed, according to a congressional Democratic aide.
  • Federal employees working without pay and those now furloughed will get their Dec. 28 pay checks under a decision by the White House budget office since pay reflects work before Dec. 21.
  • The remaining parts of the government, including the Defense Department, Departments of Labor and Health and Human Services, were already funded and won’t be affected by the shutdown, nor will mandatory entitlement programs like Medicare payments.

With no deal currently on the table, many Wall Street analysts see no end to the shutdown in sight:

"We continue to believe that it is unlikely that Congress will come up with a deal to end the current partial shutdown until well into January," said financial firm Height Securities in a commentary note on Wednesday.

Even after Democrats take the House, the gridlock in Washington will persist until Pelosi caves - or Trump does.

Published:12/27/2018 10:13:06 AM
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Published:12/27/2018 9:41:11 AM
[Markets] Mueller Must Be Investigated For Destruction Of FBI Evidence: Giuliani

Special counsel Robert Mueller needs to be investigated for destruction of FBI evidence, President Trump's attorney Rudy Giuliani said in an interview with Hill.TV's John Solomon and Buck Sexton. 

Referencing recent reports that Mueller's office allowed text messages from former FBI employees Peter Strzok and Lisa Page to be destroyed, Giuliani levied harsh accusations at the special counsel. 

"Mueller should be investigated for destruction of evidence for allowing those text messages from Strzok to be erased, messages that would show the state of mind and tactics of his lead anti-Trump FBI agent at the start of his probe," said Giuliani. 

The Inspector General of the DOJ revealed in a report this month that it found large gaps in text message records between Strzok and Page, the top FBI agents in charge of investigating both Hillary Clinton and Donald Trump during the 2016 US election. Of note, the two agents harbored extreme animus against then-candidate Trump, while supporting Hillary Clinton - bias which the DOJ claims never made its way into their work. 

After Strzok was kicked off the special counsel investigation following the discovery of anti-Trump text messages between he and Page, his Mueller's Records Officer scrubbed Strzok's iPhone after determining "it contained no substantive text messages," reported the Conservative Review's Jordan Schachtel in mid-December. 

"That should be investigated, damn it, that should be investigated fully. You want a special counsel, get one for that.

When pressed about whether he thought the erasure was intentional and not just a mistake, Giuliani alluded to the infamous erasure of a Watergate tape by President Richard Nixon’s loyal secretary a half-century earlier.

It’s actually worse than Rose Mary Woods,” he explained. “She erased less than 19 minutes of conversation, but the FBI got rid of more than 19,000 messages" and the messages from the time Strzok and Page worked for Mueller are lost forever.

Giuliani said the Russia probe investigators also should be investigated for using the Christopher Steele dossier, which he called a “piece of garbage,” to justify a search warrant on a Trump adviser without telling the court it was paid for by Hillary Clinton’s campaign and the Democratic Party.

“Do I think that is improper? Yeah, that borders on, that sounds to me a lot more like a false statement than some of the ones they charged,” he said, referring to Mueller’s team. -The Hill

Giuliani knocked Mueller's team for what he claims are "false statements" by former Trump attorney Michael Cohen during Cohen's sentencing several weeks ago on charges mostly unrelated to the Trump campaign. 

"He just lied the other day. He told the judge, ‘I was fiercely loyal to Donald Trump.’ No, he wasn’t. He taped him surreptitiously while he was fiercely loyal. He hid it. And he disclosed it," said Giuliani, adding that the Mueller team's failure to stand up during sentencing and correct Cohen's lie "is unethical in and of itself. "Making a false statement to a court, even a lawyer, you’ve to correct it." 

Giuliani added that the Mueller probe has traveled well beyond its original mandate: 

He said Mueller’s current focus on whether Trump friends such as Roger Stone were communicating with WikiLeaks outside the campaign about hacked Hillary Clinton emails shows just how far astray the probe had gone.

We’re now four degrees of separation from the original mandate of the investigation, which was collusion which did not occur,” he noted.

When asked whether Mueller should be the last special prosecutor ever appointed by the Justice Department, Giuliani hedged: “I never like to say never but I must say I have great pause after seeing the abuses in this investigation.”

The FBI, he added, still needs to rehabilitate itself from the damage done by missteps in the Russia probe. Giuliani said he believed that “99 percent of the FBI agents” were doing a great job but that a small group of “FBI politicians” had improperly hijacked the Russia probe during fired director James Comey’s tenure.  -The Hill

The former New York City mayor added that he doesn't know if FBI director Christopher Wray will help right the wrongs from the Russia probe. 

"I’m uncertain because I haven’t heard anything from him ... . The first way you fix problems is by acknowledging them." 

Published:12/27/2018 9:41:11 AM
[Markets] "Something Is Wrong": Deutsche Bank Spots An Odd Market Divergence

One of the closest correlations between major asset classes has been that between stocks and bonds. But not anymore, because as Deutsche Bank's chief international economist notes in a Wednesday note, the historical relationship between stocks and bonds is breaking apart, prompting Slok to exclaim that "something is wrong", as it could portend danger for those investors holding Treasurys in the hope these would cushion the slide in stocks.

it is no secret that bond prices and stocks are inversely correlated, or at least have been in normal times, but all that changed this year as Treasury prices have largely failed to reflect the slump in stocks, as MarketWatch notes.

"What is safe to say is that there is something driving equities lower, which is not impacting rates. Or there is something keeping long rates high, which is not impacting equities," Slok wrote in a Wednesday note.

This correlation breakdown has undercut the bond market’s status as a safe haven in a year in which few asset classes have eked out positive returns. This correlation "failure" was on full display yesterday when despite the record point surge in the Dow, Treasury yields posted a very modest move higher (one which has since been faded on Thursday). And, as MW notes, if traditional havens like U.S. government paper struggle to shield portfolios from a further selloff in equities it could mean investors will lack few reliable boltholes going forward.

To show this regime shift, Slok charts the movement of the 10-year Treasury yield against percentage changes in the S&P 500 over the last five years. It shows the two correlating closely until 2018, when they split.

Another indication of the failure of bonds to keep up with stocks: the S&P 500 is down 8% YTD, while the 10-year note yield is up more than 30 bps to 2.77% leaving the bond market also nursing negative returns this year. As a result, investors with a balanced portfolio of stocks and bonds (usually in a 60/40 ratio) have been saddled with unexpectedly deep losses, which have also hit such "balanced" entities as risk-parity funds.

What is behind this odd divergence?

According to Slok, the uncharacteristic weakness in bonds may have taken hold after bond traders began to see a gradual increase in auction sizes after Trump signed off on tax cuts, bringing the reality of trillion-dollar deficits much closer and a surge in bond supply in coming years. That may have pushed bond yields higher this year, when they should have fallen along with equities if their classic relationship had held up.

"What happened in January 2018 was that the corporate tax cut had to be financed by a significant increase in Treasury supply, and maybe the reason why long rates remain so high is because the market is beginning to price a U.S. fiscal premium into U.S. government bonds," said Slok.

Furthermore, according to Slok anyone expecting this divergence to collapse shortly may be disappointed since the breakdown of the positive correlation between stocks and bond yields may not just be a temporary problem as the federal government is projected to notch annual trillion dollar deficits for a “very long time,” said Slok, prompting traders to demand even higher bond yields in the future regardless if stocks underperform.

Published:12/27/2018 9:09:22 AM
[Markets] In Surprise Cabinet Reshuffle, Saudi King Salman Establishes Space Agency, Demotes Foreign Minister

The diplomatic crisis ignited by the killing of Jamal Khashoggi has largely subsided, and Crown Prince Mohammad bin Salman's grip on power is, if anything, even stronger than it was before (having faced down incipient challenges from one of his uncles). Which is why it's somewhat surprising to see MbS's ailing father, King Salman, order a limited cabinet reshuffle that moved around some of the key players in the scandal (including Adel al-Jubeir, who was one of the kingdom's key liaisons with western media during its response to Khashoggi's killing) and removed Prince Mohammed bin Nawaf al Saud as the Kingdom's ambassador to the UK, according to Saudi State TV station Al-Arabiya.

Amid the reshuffle, the king ordered the creation of a new political and security council (presumably to help protect his chosen successor's flank) and - in a move that is reminiscent of a controversial decision made by President Trump this year - establishes a new Saudi space agency.

As a result of the reshuffle, more liberals and progressives will move into positions of power, suggesting that it could be part of the Kingdom's plan to move ahead with its 'liberalizing' reforms to try and rehabilitate MbS's tarnished reputation as a reformer.

But perhaps the biggest change was apparent demotion of al-Jubeir to the lesser position of minister of state for foreign affairs and moving Ibrahim al-Assaf, formerly the kingdom's finance minister, to the foreign affairs role. Al-Jubeir played an important role in the Saudis PR response to the Khashoggi killing, and was seen as a stalwart supporter of the Crown Prince.



One RAND Corp analyst explained how three of the appointments, though unexpected, will help cement MbS's grip on power:

Here's a roundup of the most important moves:

  • Ibrahim al-Assaf appointed as Foreign Minister
  • Adel al-Jubeir appointed Minister of State for Foreign Affairs
  • Gen. Khalid bin Qirar Al Harbi has been appointed as the head of general security.
  • Abdullah bin Bandar bin Abdul Aziz appointed Minister of National Guard
  • Turki al-Shabbana appointed Minister of Media
  • Hamad Al-Sheikh appointed Minister of Education
  • Turki bin Talal has been appointed Governor of Asir in place of Faisal bin Khaled
  • Sultan bin Salman moved from the presidency of the Tourism Authority and appointed Chairman of the Space Authority
  • Badr bin Sultan has been replaced by Faisal bin Nawaf as Governor of Jouf region
  • Musa'ad al-Aiban appointed as National Security Adviser
  • Abdulaziz bin Turki al-Faisal has replaced Turki al-Sheikh as president of Saudi's Sports Authority
  • Turki Al-Sheikh has been appointed Chairman of the Entertainment Authority
  • Khalid bin Qarar al-Harbi has been appointed the director of Public Security
  • Prince Mohammed bin Nawaf al Saud has been recalled as ambassador to the UK (notably after saying he was "concerned" about the disappearance of Jamal Khashoggi)

But the implications of today's decision aside, there's one thing Saudi watchers should keep in mind.

Published:12/27/2018 8:41:30 AM
[Entertainment] Watch Adam Lambert Move Cher to Tears With His Powerful Performance of "Believe" Adam Lambert, CherCher's been around for, well, a long time. She's seen her fair share of tribute performances, from the Broadway stage to the streets during gay pride parades, but it seems Adam...
Published:12/27/2018 8:41:30 AM
[Politics] Daily Presidential Tracking Poll

The Rasmussen Reports daily Presidential Tracking Poll for Thursday shows that 47% 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 Trump is performing and 44% who Strongly Disapprove. This gives him a Presidential Approval Index rating of -11. (see trends).

Regular updates are posted Monday through Friday at 9:30 a.m.  Eastern (sign up for free daily email update).

For a limited time, Rasmussen Reports’ exclusive subscriber data level — Platinum — is open to everyone. See the detailed data behind all of our polls. Simply click on the Log In button in the upper right-hand corner of the page username:  and password: platinum

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 .

Published:12/27/2018 8:41:30 AM
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Published:12/27/2018 8:09:23 AM
[Markets] DataTrek: "Healthy" Markets Don’t Rally 1,086 Points On The Dow

Submitted by Nicholas Colas of DataTrek Research

Even with Wednesday’s rally, December’s 11-13% declines (S&P 500, Russell 2000) for US stocks couldn’t have come at a worse time for markets. First, there is the psychological damage of seeing such a swoon in what is a typically good month for domestic equities. Then there is the magnitude of the decline, erasing solid YTD gains in just a few weeks and making 2018 the first down year for US stocks since the Financial Crisis a decade ago.

One underappreciated problem, however, (unless you happen to manage taxable portfolios) is how money managers and investment advisors had to respond to this sudden reversal of fortune. Put yourself into their shoes for a moment:

  • In a few days your clients will see a year-end statement with declining bond, stock, and commodity asset prices. Pretty much nothing worked this year… That will sting, but after a decade of gains that is a manageable issue.
  • But… Say you sold some large winners earlier this year as stocks began to roll over, perhaps the large cap Tech names that everyone from hedge funds to retail investors over-weighted until recently. Those were good sales, to be sure, but in a taxable account they create a future liability and your clients will have to cut a large check to the US Treasury in April 2019.
  • To minimize the tax bill from those capital gains, you need to sell some losers to offset those winners. Clients understand market-to-market losses; they can be less forgiving, however, of out-of-pocket tax payments when there is no wealth effect of rising asset prices to soften the blow. Until September, those paper gains were there. Now, they aren’t.

Here is the real-world market impact of that problem. Back on December 17th we gave you a list of the 11 worst performing names in the S&P for the then-YTD. This basket shows that tax loss selling is very much in play at the single-stock level just now. Consider:

  • The names we highlighted as the biggest S&P 500 losers YTD: General Electric (GE), Mohawk (MHK), Newfield (NFX), Affiliated Managers (AMG), Invesco (IVZ), Western Digital (WDC), L Brands (LB), Alcoa (AA), Unum (UNM), Brighthouse Financial (BHF), and IPG Photonics (IPGP).
  • From the last day of November to December 24th, the average decline for these 11 names was 21.1%. Excluding GE, which was only down 7.5% over the period after a drubbing through much of 2018, the average decline of the remaining 10 names was 22.6%.
  • This group’s performance was much worse than either the S&P 500 or Russell 2000 over the same period, at -14.8% and -17.4% respectively. These 11 names didn’t suddenly show even-worse fundamentals in December; tax loss selling must have played roll in their dramatic underperformance.
  • Today, 10 of the 11 names outperformed the S&P 500, with an average gain of 6.8%. With tax loss selling likely near the tail end (or done), this makes sense.

Next: looking at the “macro” of tax loss selling, consider money flows between mutual funds and exchange traded funds over the month. The dynamic here: an advisor sells a money-losing mutual fund, creating a short/long term loss, and uses the proceeds to purchase an ETF to replace it. This has become a common practice in the last decade, even with (or perhaps because of) murky Internal Revenue Service guidance around wash sales. Recent data shows it happened with a vengeance this December:

  • The most recent Investment Company Institute data on all mutual fund/ETF flows for US equity products shows a net redemption of $8.4 billion through December 19th. Assuming that investors pulled out another $5 billion (a reasonable estimate given recent volatility) over the last week and the month’s total redemptions would be about -$13.4 billion.
  • US equity ETF inflows over the last month total +$24.7 billion. Since that includes a few days from late November, we will assume that December’s inflows will resemble that figure. (Source:
  • Conclusion: US equity mutual funds (many of them actively managed) have borne the brunt on December’s tax loss sales ($41 billion), only partially replaced by offsetting ETF purchases (that $25 billion from the previous point).
  • Important: unless a mutual fund holds enough cash to satisfy redemptions, it must sell underlying equities as net “Sell” orders come in. By contrast, an ETF purchase only creates offsetting demand for stocks if it is large enough to force a “creation” of new shares. That clearly did not happen this month, as the ICI data shows, with ETF “creates” smaller than mutual fund redemptions.

The upshot to all this: tax loss selling made December much sloppier than it otherwise might have been. It depressed many stocks that were already on track for sizeable losses. And it made the lives of active mutual fund managers very difficult as they sold holdings to keep up with redemptions. That filtered through to single stock prices as net inflows into ETFs did not keep pace.

The silver lining in this dark cloud is the “January Effect”, one of finance’s most researched and published anomalies. Two points:

  • The January Effect is NOT the idea that US stocks enjoy outsized rallies in that month. Data back to 1928 shows that July (1.6% average gain), December (1.4%), and April (1.3%) are all better bets than January (1.1%). Data here:
  • Rather, the idea is that beaten up small cap stocks tend to trade higher in January as tax loss selling abates and more normal buy-sell balances reassert themselves. That 401(k) contributions to US stock mutual funds restart in January for high-income earners also helps, to be sure.

The big questions just now, made more pointed by today’s rally: is tax loss selling done, and have markets re-priced to attractive enough levels to keep the momentum going? Our thoughts:

  • The answer to the former is clearly “Yes” – there are only 3 days left in the year, after all.
  • But… “Healthy” markets don’t rally 1,086 points on the Dow. Recall that today’s record advance eclipsed the following prior gains: October 13 2008 (936 points, the old record), October 28 2008 (889 points) and March 26 2018 (669 points). In each case, markets chopped around for months after.
  • And… Since percentage gains matter more, consider the 2 other instances where the Dow rallied closest to 5% in a day (as with today’s 4.98% advance): March 16 2000 (4.93%) and July 29 2002 (5.4%). The first was near a top; the latter was closer to a bottom, but one that would take almost a year to settle out.

Bottom line: US equity market sentiment hangs on a very fine balance just now. Tax loss selling was a reasonable (if unwelcomed)  explanation for December’s parlous performance, paired with trade/Fed/White House headlines to add fuel to the fire. But the calendar turns very shortly. The market’s fortunes need to start turning soon as well, because we’re about to lose one excuse for lousy performance.

Published:12/27/2018 7:41:49 AM
[Politics] Adults Don't Think Race Should Factor into Student Punishments

The Trump administration is planning to roll back some Obama-era policies that help ensure minority students don’t receive harsher punishments in school than their white counterparts, arguing that the policies have led to more lax discipline overall and a rise in school violence. Americans overwhelmingly agree that a student’s racial background should not be a factor in discipline.

A new Rasmussen Reports national telephone and online survey finds that, when it comes to school discipline, 89% of American Adults say a student’s racial or ethnic background should not be a factor in determining the severity of the punishment handed down. Just six percent (6%) think a student’s race should have any bearing on their punishment.  (To see question wording, click here.)

For a limited time, Rasmussen Reports’ exclusive subscriber data level - Platinum - is open to everyone. See the detailed data behind all of our polls. Simply click on the Log In button in the upper right hand corner of the page with username: and password: platinum

(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 December 18-19, 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:12/27/2018 7:41:49 AM
[Markets] Sinopec Shares Drop As Top Officials Fired Over Trading Losses

Shares of Asia's largest petroleum refiner plunged on Thursday, dragging down the broader Chinese market, following reports that two senior officials at Unipec, the trading subsidiary of Chinese refining giant Sinopec, had been dismissed by their Communist Party overseers due to an unspecified trading loss.


According to Bloomberg, which cited a statement from a company spokesman, Chen Bo, president of Unipec, and Zhan Qi, the company’s Communist Party secretary, have been suspended over "work reasons" (though losses in the subsidiary's energy-trading unit are widely suspected to be the true reason). The decision was made by the internal party committee at Sinopec and announced yesterday in an internal decision.

News of the dismissals comes one day after US crude prices posted their largest one-day jump in two years (though it's likely that Unipec, like refiners across the world, posted large losses during the alarmingly swift plunge in oil prices during Q4, which left many refiners wrong-footed). Several refiners have restructured operations. Sinopec shares fell as much as 7.1% on the news, sending them to their lowest level in two years as shares fell in afternoon trading; meanwhile, the Shanghai Composite closed some 0.6% lower as the drop in Sinopec caused Chinese shares to buck the overall positive trend for Asia stocks off the back of yesterday's historic rally in the US. 

Chinese markets also suffered from data showing the first drop in industrial profit since 2015.



The selloff also hit shares of PetroChina, China's second-largest oil producer (which became the world's first $1 trillion market cap company more than a decade before Apple), which have slumped to an all time low.


Unipec helped carry out the Communist Party's retaliation against the US by reducing its imports of US crude (the company had previously helped establish China as the biggest buyer of American crude before the trade spat intensified).

Unipec’s purchases on behalf of Sinopec were a critical contributor to China becoming the biggest buyer of U.S. crude, before shipments were stopped due to the trade war between the two countries. Chen, who headed the firm’s trading business, said in September that the company had put a plan to boost American imports on hold as it assesses the impact of the dispute.

While it stopped buying American supplies for use in Sinopec’s refineries, Unipec continued to lift cargoes to resell to other firms in what’s known as third-party trading. More recently, an easing of tensions has spurred more shipments. Earlier this year, Unipec was also embroiled in a dispute with Saudi Arabia, saying the producer’s prices were costly and cutting purchases just as it was boosting U.S. imports.

Ling Yiqun, a vice president at Sinopec, will take over the duties formerly performed by Chen and Zhan, Bloomberg said, citing "people with knowledge of the reshuffle". Meanwhile, Chen Gang, a vice president at Unipec, will take over administrative responsibilities. Given the opacity at Sinopec (a feature common among Chinese firms) investors are awaiting more information about the size of the loss.

"The market is closely watching for any details of the loss, including its size and how big an impact it may have on the overall operations of Unipec and Sinopec." Li Li, an analyst with industry consultant ICIS China, said by telephone from Shanghai. "So far, the confirmed information is very limited, but it also seems that the risk is controllable."

Though should the rebound in oil prices continue, it could take some pressure off the company's shares.

Published:12/27/2018 7:09:36 AM
[Markets] S&P Futures Tumble As Epic One-Day Rally Fizzles

On any other day, a 1.5% drop in the S&P futures would be cause for alarm; however after yesterday's historic 5% surge in US stocks it merely prompts a shrug, because even with ES sliding -36 points, it is roughly where it was trading at 3:35pm yesterday.

Whether because we went from a near record oversold market to overbought in one day, or just because traders concluded that yesterday's surge was nothing more than a bear market rally, the kind of which we saw on so many occasions during the depths of the financial crisis...

... nearly a third of yesterday's rally fizzling, wiped out in overnight trading, with S&P futures sliding for the past 6 hours and after an early spike which pushed the Emini briefly above 2480, the contract has since dropped as much as 60 points and is prompting renewed concerns about the sustainability of yesterday's bullish reversal.

That said, even with the previous session’s surge, it’s still a horrible month for American stocks, with the S&P 500 down almost 11%.

Meanwhile, even as futures dropped, world stocks bounced off a near two-year low on Thursday, lagging Wall Street's dramatic surge, though the first fall in Chinese industrial profits in three years and renewed Italian banking worries offered a sobering reminder of the problems weighing on the world economy.

“The relentless selling which prevailed leading up to Christmas has mercifully halted as U.S. stock markets recorded significant gains,” said Stephen Innes, trader at OANDA. According to Innes, the rally was partly due to a Mastercard Inc report that sales during the U.S. holiday shopping season rose the most in six years in 2018, helping allay concerns about the health of the U.S. economy. "The surge in online purchases over the holiday season should be a reminder for the markets never to underestimate the purchasing power of the U.S. consumer."

Stocks in Asia and Europe took their cue from the Wednesday rally and opened strongly, pushing the MSCI world equity index, which tracks shares in 47 countries, 0.4% higher. The index had already spiked 2.3% in the previous session, rising off a 22-month low hit on Christmas Eve.

However, the global rally fizzled in Europe where shares opened higher 0.5%, then erased most of the early gains and the Stoxx 600 was trading down -0.9% at last check, dragged lower by Italian stocks. Milan was hit by renewed concerns over the country’s banking sector after lender Banca Carige was denied a cash call by its largest shareholder. The news weighed on Italian government bonds too, curbing a month-long rally and pushing 10-year yields higher on the day.

Top European News

  • Italian Bonds Slip as Traders Prepare for Final Auctions of 2018
  • EU Won’t Allow France 2nd Deficit Overshoot: Oettinger to Funke
  • ECB Sees Ongoing Economic Growth With Increased Downside Risks
  • European Retail Shares Lead Gains With Tesco, Kering Rising
  • Euro Zone’s Northern Tip Ends Year on a Low as Confidence Sinks

Earlier, MSCI’s index of Asia-Pacific shares ex-Japan rose 0.6% and away from eight-week lows while Japan’s Nikkei managed to pull out of bear market territory, to closing 3.9% higher while Australian shares jumped 1.9 percent. But Chinese shares did not join the rebound, with mainland shares closing at session lows as well as Hong Kong down 0.4 percent.  The Shanghai Composite Index erased morning advance and closed at session lows as China Petroleum & Chemical Corp. fell the most in more than two months, after Sinpoec shares tumbled as much as 8.6% after the company announced that Chen Bo, president of Chinese oil trading giant Unipec, and Zhan Qi, co.’s communist party secretary, have been suspended.

Also, as reported previously, earnings at China’s industrial firms dropped in November for the first time in nearly three years.

Top Asian News

  • China’s Industrial Profits Drop for First Time Since End 2015
  • Vietnam Economy Remains Outperformer as Growth Tops 7% Mark
  • Trade Losses at China Oil Giant Said to Spur Sinopec Suspensions
  • Huawei’s Revenue Growth Rebounds Despite ‘Storm- Tossed’ 2018
  • NEC Pushes Deeper Into Services With $1.2 Billion Deal for KMD
  • PBOC’s Ma Says Replenishing Bank Capital Key to GDP Growth: CSJ

Meanwhile, US Treasuries led advances in global bonds amid renewed skepticism about recent risk-asset gains and rekindled demand for the safety of government debt. Yields on 10-year U.S. notes fell toward the lowest level since April as the market was supported by a futures block trade equivalent to a DV01 of $717,000. As a result, the 10Y has cut its losses in half, and was yielding 2.772%, 5bps lower than where it closed Wednesday's session.

The dollar also gave up some of its overnight gains, but losses were limited to around 0.3% against a basket of currencies. Against the yen, a perceived safe haven, it was off 0.5% at 110.82 yen. It had risen nearly 1% overnight, booking its largest single-day gain against the yen since late April. The Bloomberg Dollar Spot Index pared Wednesday’s rally with the dollar slipping against most peers; yen and euro both gained at least 0.4% while Aussie and kiwi drop on renewed China growth concerns.

Commodities were also hit, with concerns over a faltering global economy and signs of a crude oil glut pressured oil prices, sending Brent futures 2.4% lower to $53.26 a barrel and partly reversing the previous day’s 8% jump, the biggest in two years. Another safe-haven, gold, was up 0.4 percent, remaining just below a six-month peak hit earlier this week.

Market Snapshot

  • S&P 500 futures down 1.6% to 2,432.50
  • STOXX Europe 600 down 0.5% to 333.53
  • MXAP up 1.8% to 145.41
  • MXAPJ up 0.4% to 471.83
  • Nikkei up 3.9% to 20,077.62
  • Topix up 4.9% to 1,501.63
  • Hang Seng Index down 0.7% to 25,478.88
  • Shanghai Composite down 0.6% to 2,483.09
  • Sensex up 0.6% to 35,853.59
  • Australia S&P/ASX 200 up 1.9% to 5,597.20
  • Kospi up 0.02% to 2,028.44
  • German 10Y yield fell 2.4 bps to 0.226%
  • Euro up 0.4% to $1.1396
  • Italian 10Y yield unchanged at 2.471%
  • Spanish 10Y yield fell 0.3 bps to 1.398%
  • Brent futures down 1.7% to $53.54/bbl
  • Gold spot up 0.5% to $1,273.46
  • U.S. Dollar Index down 0.3% to 96.77

Top Overnight News from Bloomberg

  • Donald Trump said that he has no plans to withdraw American troops from Iraq, speaking to reporters at Joint Base al Asad in Iraq on Wednesday, making his first visit to troops in a combat zone as commander-in-chief a week after dismissing his defense secretary in a dispute over Middle East strategy
  • Japanese shares rallied for a second day, with the Topix index climbing more than 5% and poised for its biggest advance in two years
  • Oil held its biggest gain in two years, after being swept up in a rebound across risk assets spurred by optimism about the global economy
  • A U.S. government delegation will travel to Beijing in the week of Jan. 7 to hold trade talks with Chinese officials, two people familiar with the matter said
  • President Donald Trump won’t try to fire Federal Reserve Chairman Jerome Powell, a top White House economic adviser said. Kevin Hassett told reporters “yes, of course, a hundred percent” on Wednesday after he was asked whether Powell’s job is safe
  • President Trump said he won’t relent on the partial government shutdown unless Congress funds his proposed border wall, and wouldn’t say whether he’d accept less than $5 billion for the project
  • Profits of Chinese industrial companies fell for the first time in almost three years, highlighting the effects of slowing economic growth, falling prices, and the trade war with the U.S.
  • Replenishing capital of Chinese banks is key to boost lending growth and support the economy, People’s Bank of China adviser Ma Jun was cited as saying in a front-page report in China Securities Journal

US Event Calendar

  • 8:30am: Initial Jobless Claims, est. 215,500, prior 214,000; Continuing Claims, est. 1.68m, prior 1.69m
  • 9am: FHFA House Price Index MoM, est. 0.25%, prior 0.2%
  • 9:45am: Bloomberg Consumer Comfort, prior 58.8
  • 10am: Conf. Board Consumer Confidence, est. 133.7, prior 135.7; Present Situation, prior 172.7; Expectations, prior 111
  • 10am: U.S. Census Bureau to delay New Home Sales data amid shutdown
Published:12/27/2018 6:40:21 AM
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Published:12/27/2018 5:40:49 AM
[Markets] Trump Considering Order To Ban Purchases Of Huawei, ZTE Equipment

After the US government elicited outrage from the Chinese due to its attempts to convince its allies to bar the use of equipment made by telecoms supplier Huawei, President Trump is apparently weighing whether to take another dramatic antagonistic step that could further complicate trade negotiations less than two weeks before a US delegation is slated to head to Beijing.

According to Reuters, the White House is reportedly considering an executive order that would ban US companies from using equipment made by Huawei and ZTE, claiming that both companies work "at the behest of the US government" and that their equipment could be used to spy on US citizens. The order would invoke the International Emergency Economic Powers Act to order the Department of Commerce to prohibit the purchase of equipment from telecoms manufacturers that could threaten national security.


Though it wouldn't explicitly name Huawei or ZTE, the ban would arise from Commerce's interpretation. The IEEA allows the president the authority to regulate commerce in the face of a national emergency. Back in August, Congress passed and Trump signed a bill banning the use of ZTE and Huawei equipment by the US government and government contractors. The executive order has reportedly been under consideration for eight months, since around the time that the US nearly blocked US companies from selling parts to ZTE, which sparked a mini-diplomatic crisis, which ended with a deal allowing ZTE to survive, but pay a large fine.

The feud between the US and Huawei has obviously been escalating in recent months as the US has embarked on an "extraordinary influence campaign" to convince its allies to ban equipment made by both companies, and the arrest of Huawei CFO Meng Wanzhou in Canada has also blossomed into a diplomatic crisis of sorts.

But the real reason issuing a ban on both companies' equipment is seen as a priority is because Huawei's lead in the race to build 5G technology is making its products more appealing to global telecoms providers. Rural telecoms providers in the US - those with fewer than 100,000 subscribers - are particularly reliant on equipment made by both companies. They've expressed concerns that a ban would require them to rip out and scrap their equipment at an immense cost.

Rural operators in the United States are among the biggest customers of Huawei and ZTE, and fear the executive order would also require them to rip out existing Chinese-made equipment without compensation. Industry officials are divided on whether the administration could legally compel operators to do that.

While the big U.S. wireless companies have cut ties with Huawei in particular, small rural carriers have relied on Huawei and ZTE switches and other equipment because they tend to be less expensive.

The company is so central to small carriers that William Levy, vice president for sales of Huawei Tech USA, is on the board of directors of the Rural Wireless Association.

The RWA represents carriers with fewer than 100,000 subscribers. It estimates that 25 percent of its members had Huawei or ZTE equipment in their networks, it said in a filing to the Federal Communications Commission earlier this month.

As Sputnik pointed out, the news of the possible ban followed questions from Defense Secretary Gavin Williamson, who expressed serious concerns over the involvement of Huawei in Britain's 5G network, suggesting that Beijing sometimes acted "in a malign way." But even if it loses access to the US market, Huawei's global expansion and its leadership in the 5G space are expected to continue to bolster profits and growth. Currently, Huawei sells equipment in 170 countries.

According to a statement from the company's rotating chairman, the company's full-year sales are expected to increase 21% to $108.5 billion this year. The company has signed 26 contracts globally to supply 5G equipment for commercial use, leaving it well ahead of its US rivals.

Published:12/27/2018 5:40:49 AM
[Markets] China Industrial Profits Collapse In November, Set To Worsen

For the first time in almost three years, the profits of Chinese industrial companies tumbled in November, highlighting the effects of slowing economic growth, falling prices, and the trade war with the US.

"Slowdown in sales growth and factory gate inflation, combined with rising costs, led to the decline of industrial profits in November," the NBS said in the statement on its website.

Profits contracted 1.8% year-on-year in November, vs. an expansion of 3.6% yoy in October. This is the first year-over-year contraction in industrial profits since 2015. In month-on-month terms, profits fell meaningfully after seasonal adjustment by around 7.2% (non-annualized), vs. a contraction of 0.1% in October. In absolute level terms, profits in November were the lowest of the year.

Among major sectors, profit growth turned negative in computer manufacturing, ferrous metal smelting and pressing, and chemical product manufacturing, but improved in general equipment manufacturing, electrical machinery manufacturing and automobile manufacturing.

As Goldman Sachs notes, compared with November 2017, profit margins (total profits divided by revenues from principal business) were materially lower by around 0.6pp, contributing to the fall in headline profit year-over-year growth. On a 12-month rolling average basis, both upstream and downstream industries' margins narrowed. Revenue growth decelerated in November, with PPI inflation modestly lower in November vs. October, and the implied real industrial sales growth slowed in November, to around 4.5% yoy based on our estimate, vs. 5% yoy in October.

However, flashing red flags everywhere, Bloomberg notes that the official year-on-year growth rate for profits began diverging from the growth rate calculated from the nominal profit figures in 2017, and that continued to be an issue in November’s release.

This discrepancy has led many to question the veracity of the official data.

And more worrying still, looking ahead, industrial profit growth continues to face headwinds, as Goldman expects both industrial production growth and PPI inflation to soften next year, especially in Q1.

And before investors get all gung ho about "bad news" being "good news" for global markets - because, as the narrative goes, the worse economic data gets, the more monetary and fiscal easing Chinese authorities will unleash - they have been trying this for over six months...

And, as confirmed by today's collapse in profits, it's not working.

Published:12/27/2018 4:40:35 AM
[Markets] Kass: 10 Surprises Which Could Spike The Market Another 5% In One Day

Make no mistake about it, the stock market panic and Bear Market of November-December 2018 is serious and profoundly threatens the economic and profit pictures, but after yesterday's panic-buying in stocks (as investors front-ran pension re-allocation panic),Doug Kass (via, take a look at what else could spark another 5% explosion higher in stocks...

Look up and not down; look out and not in; look forward and not back, and lend a hand.” 

– Edward Everett Hale

As mentioned on Friday, a fragile domestic economy may be undermined by the negative wealth effect of lower equity prices:

“The wealth effect is a theory suggesting that when the value of equity portfolios are on the rise because of accelerating stock prices, individuals feel more comfortable and confident about their wealth, which will cause them to spend more. In 1968, for instance, economists were mystified when a 10 percent tax hike failed to put the brakes on consumer spending. Later, the sustained spending was credited to the wealth effect. Even though disposable income declined because of the additional tax burden, wealth continued to grow because the stock market persistently climbed higher.”— Investopedia

According to Wilshire Associates, the U.S. stock market fell by $2.1 trillion last week. That loss in value is more than 10% of the 2017 U.S. Gross Domestic Production (GDP) of $19.3 trillion. (Our domestic GDP represents approximately 31% of world GDP). The loss in value from the September 2018 market top is well in excess of $5 trillion, representing about 25% of projected 2018 U.S. GDP.

The fixed income’s message of slowing economic and profit growth has been resounding — and until recently has been dismissed by most who were intoxicated by rising equity prices and favorable (but lagging) economic data.

Given the steady drumbeat of disappointing high-frequency economic data that suggest consensus growth expectations are too optimistic and underscores the fragile state of the domestic economy, this is a particularly untimely period for stocks to crater.

The economy — from a rate of change standpoint — is now at a critical point. No doubt a lot of damage to forward 2019 economic growth has already occurred and will result in a reduction in consensus profit forecasts. Any further damage to the stock market will amplify the heightened and powerful headwinds of the negative wealth effect — something few have considered.

All is Not Lost – Look Up and Not Down

To many who have taken a large hit to their investment portfolios over the last six weeks, all seems lost.

As bad as things feel this morning (the worst month of December since 1928), all is not lost.

Though rising recession risks are expanding and the U.S. growth outlook will be tested in 2019, history shows that it truly is darkest before the dawn.

That said, investor sentiment – based on many measures – has now been reduced to pure fear, an ingredient that didn’t exist during the lengthy Bull Market in Complacency so apparent over the last 2-3 years. Under the weight of near unprecedented financial market volatility many of the most confident optimists prior to October are now the most confident pessimists today. (Like the panicky ETF holder community – who too often emotionally redeem at or near the bottom – and the levered risk parity boyz, they too often buy high and sell low).

I’m astounded by people who want to ‘know’ the universe when it’s hard enough to find your way around Chinatown.”- Woody Allen

My annual Surprise List is not about predictions. Rather, my Surprise List incorporates the notion of Possible Improbables. In sports, betting my surprises would be called an “overlay”, a term commonly used when the odds of a proposition are in favor of the bettor rather than the house.

The List is the outgrowth of five core lessons I have learned over the course of my investing career:

  1. How wrong conventional wisdom can consistently be.

  2. That uncertainty will persist.

  3. To expect the unexpected.

  4. That the occurrence of Black Swan events are growing in frequency.

  5. With rapidly changing conditions, investors can’t change the direction of the wind, but we can adjust our sails (and our portfolios) in an attempt to reach our destination of good investment returns.

With the S&P (cash today at 2350 and not 2930 – the September high), today’s Top Ten (surprises) take a different and more upbeat tone that my year end 15 Surprises for 2019.

Given my calculus that the S&P’s “fair market value” is approximately 2450, we should begin to look up and not down as the upside reward v. downside risk has finally shifted into positive ground.

Two quotes, one from an acquaintance (The Oracle of Omaha) and one from a friend (By) come to mind this morning:

“Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.” – Warren Buffett

“Disasters have a way of not happening.” – Byron Wien

And we should be considering what positive Surprises may occur that could reverse the carnage of the last few months in our markets…

My Top Ten List

Here are the Top Ten possible events that could cause stocks to rise by at least 5% in one trading session:

1. An announcement by the Federal Reserve that it plans to transition from the rigid language of “gradual increases” to a more flexible economic data and market dependent policy. Investors immediately interpret this message to mean that the Fed will (1) cease interest rate increases (in 2019) based on the tightening financial conditions, and (2) will likely slowdown the reduction in the size of their balance sheet.

2. Europe extends QE and it gets authority to buy European stocks. Mario Draghi decides not to retire next year.

3. China introduces a major easing policy that has substance, clout and power.

4. Treasury Secretary Mnuchin resigns and is replaced by Hank Paulson.

5. The U.S.China trade war ends with a full resolution.

6. Democrat Joe Biden and Republican Mitt Romney, aiming at bringing back national unity, jointly declare they are running on the same ticket for President and Vice President in 2020.

7. The Mueller investigation concludes that the President was guilty of collusion and obstruction. Trump immediately resigns and Mike Pence becomes the President of the United States.

8. The SEC initiates broad reform aimed at curbing the dominance of high frequency (quant) strategies and products and reestablishing the uptick rule. Passive investing begins to lose market share to active investing.

9. On the same day that Berkshire Hathaway (BRK.A) (BRK.B) announces a premium bid for 3M (MMM) , KKR and Blackstone announce separate $25 billion acquisitions. Apple (AAPL) follows this M&A explosion with a proposed leveraged buyout, (also) partially financed by Berkshire Hathaway.

10. On the same day, 1Q2019 earnings for Amazon (AMZN) and Alphabet (GOOGL) report substantially better than expected results.

We’ll see.

Published:12/27/2018 4:03:56 AM
[Markets] Erdogan Invites Trump For Visit As Ankara Mulls Double-Deal For US, Russian Missile Systems

President Trump has been invited by to visit Turkey in 2019 by President Recep Tayyip Erdogan, the White House said on Monday night. While Trump has not accepted the offer, he "is open to a potential meeting in the future," according to White House spokesman Hogan Gidley. 

As Bloomberg notes, the invitation was extended less than a week after President Trump announced a massive withdrawal of US troops from Syria - where they have supported Kurdish forces considered enemies of the Turkish state. Erdogan considers the US allies an extension of the PKK - deemed a terrorist group by both the EU and US. 

During a lengthy phone call on Dec. 14, Trump shocked even those in his inner circle by yielding to a suggestion from Erdogan to pull U.S. forces from the country, where eight years of civil war has forced millions of citizens to flee and established Iran and Russia as protectors of the government of Syrian President Bashar al-Assad.

The president later declared that the U.S. had won the battle against Islamic State, saying that was “my only reason for being there.” -Bloomberg

Secretary of Defense James Mattis resigned abruptly following Trump's decision, followed by leading US diplomat Brett McGurk - a move which Trump couldn't resist knocking over Twitter.

Despite the strengthening of relations between Washington and Ankara, Turkey will not alter its plans to buy the Russian S-400 missile defense system regardless of its decision on whether or not to buy US-made Patriot missiles, according to the Turkish presidential spokesman on Monday, according to France24

Russian-made S-400 missile system

"The US Patriot sale process does not affect the S-400 process. We don't see one as an alternative for the other," said Ibrahim Kalin. 

US made-Patriot missile system

Turkish President Recep Tayyip Erdogan will convene his top defense body on Thursday to discuss a December 19 proposal to sell a package including 80 Patriot missiles and 60 PAC-3 missile interceptors to Turkey, a senior Turkish official told Bloomberg

Ankara's purchase of Russian S-400s has drawn criticism from NATO allies - with the United States warning that the purchase jeopardized Turkey's participation in the F-35 fighter jet program. 

Turkish officials have previously said it "needs" the S-400 missile defence system and repeatedly stressed that Ankara would buy systems from allies if they had sold them.

Turkish media has reported that the first delivery from Russia will be in 2019. -France24

Turkey's S-400 order has been cited as a key symbol of Turkey's closer relationship between Erdogan and Russian President Vladimir Putin, as the two men have also been working in concert to find a political solution to the almost seven-year war in Syria despite being on opposite sides of the conflict. 

While Turkey has supported Syrian rebels and called for Syrian President Bashar al-Assad's ouster, Russia's 2015 intervention helped the Damascus regime recapture large portions of the country taken over by Islamic militants.  

Published:12/27/2018 3:38:20 AM
[Markets] Project Fear: Brexit Under Threat

Authored by Mark Angelides via Liberty Nation,

The people can only be controlled if they are scared...

The only way to effectively control a population without resorting to violence is to keep them subdued through fear, and this is exactly what is happening to the people of the U.K. as they try to get their democratic rights enacted.

On June 23, 2016, the British people took part in the largest ever democratic exercise in the nation’s history: They voted to leave the confines of the European Union and all of its institutions. The people voted, and the politicians acted. Unfortunately, the Westminster parliamentarians acted in none but their own interest.

More than two years later and Britain is still shackled to a supranational organization that is all too happy to punish the country as an example to others who dare to try to leave.

Project Fear

The entirety of the U.K. establishment has taken it upon themselves to carry out the greatest propaganda exercise the land of Shakespeare has ever witnessed.

Welcome to Project Fear. The poor folk of Britain who chose to turn their backs on the foreign overlords of the European Council and Presidency which cannot be unelected, cannot be voted for, and who have the sole power to make law within the European Union. These are the same institutions, along with the current U.K. government, which are now in the process of trying scare Brits out of their minds.

Here are some of the Project Fear predictions the government has made:

  • No clean drinking water.

  • Food shortages.

  • No insulin for diabetics.

  • Shortages of medicine.

  • No more sandwiches (yes, really).

  • Risk of “super-gonorrhea” epidemic.

  • Immediate recession.

  • Every family thousands of pounds poorer.

  • No planes allowed through other nations’ aerospace.

  • The south of England becomes a carpark for trucks that were previously engaged in barrier-free trade between nations.

All these trials and tribulations are being presented by the government and the establishment media as undisputable future events in order to terrify the poor slobs of Britain.

The Plan

The idea behind Project Fear is to get the nation so scared that when the government eventually decides to call for a second referendum on the Brexit decision – which they will – the sheep will vote in the “correct” way.

How do we know this is what is happening? Well, it has happened before, in every country that ever voted to leave the E.U. or reject a new treaty that pushed for greater integration into the European whole. In France and Ireland, the government and media launched concerted attacks against the voters, and then, quelle surprise, asked the public to vote again … just to be sure they had actually voted for what they really wanted.

To ensure a second public vote on Britain’s continued membership of the European Union, Prime Minister Theresa May has capitulated to every demand made by the European Presidency. Why? Because the people will see that May’s “deal” is actually worse than being tethered to the sclerotic union, and this has surely been done on purpose.

Britain On The Ropes

It is not as though the British public are unaware that this is what is happening. Project Fear is on the lips of all, whether down the local pub, at the supermarket, or online, everyone is talking about the British government’s plans to lock the U.K. permanently into a European customs union and single market.

Has the government gone too far? There is still time to resolve the Brexit issue without dividing the nation even further. There are groups who are willing to use violence to achieve their ends, and there are those who would prefer anarchy to order. Before either of these two forces gain traction, the prime minister must act decisively and for the good of the nation.

Published:12/27/2018 2:39:54 AM
[Markets] Top Digger Warns Excavator Demand Will Slow In 2019 As Trade War Slowdown Worsens

Markets' seeming invulnerability to fears of a trade-related slowdown in 2019 has finally dissipated, and equity markets in the US have finally caught down to the rest of the world. Amid the selloff, shares of industrial giants like manufacturers of mining equipment - Caterpillar in the US and Komatsu and Hitachi in Japan - have been hit particularly hard.


And with both the WTO and executives at the world's largest container shipping company warning that they expect a further contraction in international trade next year, it's perhaps hardly surprising that this trend - along with  softening of commodity prices - is expected to blunt growth in demand for excavators and other mining equipment, according to the CFO of Hitachi, a manufacturer of some of the heaviest mining equipment used by industrial giants around the world.

The WTO's trade outlook indicator showed that trade likely neared the "below trend" level during Q4.


And global trade volume has dipped this year:


Hitachi CFO Tetsuo Katsurayama told Bloomberg that demand in the year starting April 1 will probably shrink, or remain flat, following three years of growth. He tied this to falling commodity prices, as well as tensions about the US-backed trade war, fading US stimulus, China's worsening economic outlook, continued Fed rate hikes and even the uncertainty surrounding the UK's chaotic Brexit negotiations.

"There’s no doubt the financial situations will somewhat put the brake on investment appetite" for both construction and mining equipment, Katsurayama said in an interview in Tokyo. "We can’t separate ourselves from the financial markets."

Growth in North America and India may not be able to compensate for a slowdown in Western Europe, the Middle East and Africa, Katsurayama said. During the current cycle, some 229,000 excavators are expected to be sold during the year ending March 31, 2019, up 4% from a year earlier and not far from the 2010 peak. Though even if demand weakens in the year beginning in April, Katsurayama said he doesn't expect the number of units sold to fall "substantially" below 200,000 units. And an expected wave of replacements could offer a boost.

But unless the end of a US-China trade war triggers a sharp rebound in slowing trade, industrial bellweathers like Hitachi (down 40% this year), Komatsu (down 44%) and Caterpillar (down 26%), will likely continue to take it on the chin.


Published:12/27/2018 2:09:01 AM
[Markets] US Pullout From Syria: Who Will Fill The Vacuum?

Authored by Burak Bekdil via The Gatestone Institute,

  • "What Turkey is going to do is unleash holy hell on the Kurds. In the eyes of Turkey, they're more of a threat than ISIS. So this decision is a disaster." - U.S. Senator Lindsey Graham.

  • The U.S. move also could turn out to be a death-blow on Washington's efforts to keep Tehran from further establishing itself in Syria and threatening the security not only of Israel, but of the entire Mediterranean region.

  • Potential Turkish-Kurdish conflicts would further destabilize Syria and strengthen Russia. This point cannot be ignored. Turkey's and Iran's dependency on Russia in Syria will increase, as the trio further teams up to have a larger role in shaping Syria's future.

  • It is understandable that abstaining from the role of the world's policeman may look consistent with Trump's pre-election pledge to "Make America Great Again." Nevertheless, caution is needed here: Leaving the "policing" job in the world's most volatile and turbulent parts to un-free regimes such as Russia, China, Iran and Turkey could also damage the quest of America and others in the free world to become great again -- and to remain free. The free world simply does not have the luxury -- even in remote geographical areas -- of allowing security to be policed by un-free state and non-state actors.

U.S. President Donald Trump's optimism about a potential Turkish military campaign to finish off ISIS looks woefully premature. Trump taking seriously Turkish President Recep Tayyip Erdogan's pledge to "eradicate whatever is left of ISIS" is also problematic. ISIS and some of its offshoots are Erdogan's former Islamist allies. Pictured: Trump and Erdogan talk at the NATO Summit in Brussels, Belgium on July 11, 2018. (Photo by Sean Gallup/Getty Images)

U.S. President Donald Trump's unexpected decision to pull U.S. troops from Syria (and Afghanistan) was music to Turkish ears. Turkish President Recep Tayyip Erdogan called it "the clearest and most encouraging statement" from Washington.

Foreign Minister Mevlüt Cavusoglu welcomed Trump's abrupt decision to withdraw all 2,000 U.S. troops from northern Syria. Defense Minister Hulusi Akar vowed that that Syrian Kurdish fighters whom Turkey considers as top regional security threat, would soon be "buried in the trenches that they dig."

The way Trump made that decision has also given new ammunition to Turkey's pro-Erdogan media to portray the decision as "Erdogan's victory." The media, in Turkey and abroad, widely reported that Trump decided on the pullout after a Dec. 14 telephone conversation with Erdogan. According to Washington's official account of the conversation, the two leaders had "agreed to continue coordinating to achieve our respective security objectives in Syria."

Long before Trump decided in favor of troop withdrawal, Turkey had been threatening a cross-border military operation against U.S, allies, the Kurds, in Syria. Although Ankara pledged maximum care to avoid clashes with the U.S. troops some observers feared an unwanted Turkish-US military conflict. Turkey's security services had long been supplying military HQ with loads of intelligence from Arab, Kurdish and mixed population locations in northern Syria. The Turkish Air Force conducted airstrikes on Kurdish strongholds in neighboring Iraq. The Turkish military also massed troops near a town on the Syrian border, although Erdogan seemed to agree to a delay in his planned incursion into Syrian territory, the third such operation in two years.

Now what? In its official narrative, Ankara could eradicate the remnants of the Islamic State group from Syria with just logistical help from Washington. Erdogan has openly said that military operations would also target Syrian Kurdish militants from the People's Defense Units YPG), the military wing of the Democratic Union Party (PYD) which Turkey says is an offshoot of the PKK, a Kurdish militant group that has been fighting Turkey for autonomy or secession since 1984. Turkey, the U.S. and European Union have long designated the PKK as a terrorist organization. With the upcoming U.S. withdrawal, Turkey has won the chance militarily to challenge YGP/PYD without the risk of clashing with the U.S. troops. It is not known yet if Erdogan, in return for securing the U.S. pullout, pledged not to engage in an all-out war with the Kurds. But Kurds remain nervous.

Syrian Democratic Forces (SDF), the main military group that allied with the U.S. in the fight against Islamic State (and made up of mainly YPG fighters), says it would have to withdraw fighters from the battle against radical jihadists to protect its borders in the event of a Turkish attack. "Fighting [Islamic] terrorism will be difficult because our forces will be forced to withdraw from the Deir el-Zor front to take up positions on the border with Turkey to stop an eventual attack," Elham Ahmed, the co-chair of the SDF's political wing, said in Paris.

"What Turkey is going to do is unleash holy hell on the Kurds," Sen. Lindsey Graham, R-S.C. said on the Senate floor.

"In the eyes of Turkey, they're more of a threat than ISIS (IS). So this decision is a disaster." Trump's decision complicates the Syrian theater more than just opening up a new battleground between Kurdish fighters and Turkish troops.

In any Turkish operation Tel Abyad promises to be an imminent target. Militarily speaking Turkey will wish to divide the main block of Kurdish territory into two creating a major crevice of land between Manbij and Kobane in the West and Qamishli and Hasaka in the East. In 2011 around 70% of the population of Tel Abyad was Arab (and some 25% Kurdish). The U.S. withdrawal will mean flocks of Arab fighters who were trained at military camps in Turkey, returning to the Arab-Kurdish zone to fight as Turkish proxies, fueling an Arab-Kurdish, in addition to a Turkish-Kurdish fighting. Most Arab tribes, most notably Jamilah and Bou Jarada, remain loyal to Turkey but had in the past also supported IS. That risk highlights a major down side of Trump's plan.

Backed militarily by Turkey and returning to northern Syria some Arab tribes may be exposed to the risk of "re-recruitment" into potentially new radical Islamist groups. IS may have largely lost its institutional identity but its fighters have not disappeared from the earth. Their tactical (anti-Kurdish) alliances with Turkey-backed Arab militants may lead to new, longer-term alliances, creating various IS-like groups with various new banners and brands. That being the new setting in northern Syria, Basher al-Assad, Syria's Russian-backed dictator, may see it totally fit to encourage new jihadists in order to win an upper hand in the "political process" (the constitutional reform process) that will theoretically shape the future of his country.

The Syrian theatre is too complex to feature a zero-sum game. The state and non-state actors that cheered Trump's decision to withdraw are: Erdogan's Turkey, which wants to build a Sunni, Islamist and pro-Turkey administration in northern Syria; Russia, whose now-augmented power in Syria will also augment Assad, and Iran, which will now gain new advances in Syria.

Potential Turkish-Kurdish and Arab-Kurdish conflicts would further destabilize Syria and strengthen Russia. This point cannot be ignored. Turkey's and Iran's dependency on Russia in Syria will increase, as the trio further teams up to have a larger role in shaping Syria's future.

On December 19, foreign ministers from the three countries met in Geneva to cement their increasing convergences over Syria. Russia must be especially pleased to have a new opportunity to weaken even further Turkey's deeply problematic ties with its Western and NATO partners. Potential Turkish-Kurdish and Arab-Kurdish conflicts would further destabilize Syria and strengthen Russia. This is a point that cannot be ignored.

The U.S. move also could turn out to be a death-blow on Washington's efforts to keep Tehran from further establishing itself in Syria and building a Shia land bridge all the way to Lebanon and therefore threaten the security not only of Israel, but of the entire Mediterranean region.

In September, speaking on the margins of the UN convention, Trump's National Security Advisor John Bolton said that the U.S. forces would remain in Syria until Iran and its proxies departed. With its numerous potentially serious drawbacks, Trump's decision deeply discredits the U.S. administration, its key figures -- and Trump himself.

The U.S. president said on Twitter December 23 that Turkey promised it would ensure that ISIS is defeated in Syria. He said:

"President Erdogan of Turkey has very strongly informed me that he will eradicate whatever is left of ISIS in Syria.... and he is a man who can do it plus, Turkey is right 'next door.' Our troops are coming home!"

Trump's optimism about a potential Turkish military campaign to finish off ISIS looks woefully premature. Trump taking seriously Erdogan's pledge to "eradicate whatever is left of ISIS" is also problematic. ISIS and some of its offshoots are Erdogan's former Islamist allies. The lines of alliance and hostility are blurred but always open to further change.

Erdogan's word is fine -- but probably not good enough. First, Erdogan's primary motive to send the Turkish army into Syria is not to fight jihadists. He may even have less appetite to fight jihadists who may come up under non-ISIS banners. Some groups of jihadists (aspiring but not yet ISIS 2.0) are his allies and proxies. It would have been wiser if Trump got assurances that Erdogan will finish off every Islamist/jihadist group in Syria, not just what remains of ISIS. If one can actually trust Erdogan's word, that is. Erdogan has a history of not being reliable.

It is understandable that abstaining from the role of the world's policeman may look consistent with Trump's pre-election pledge to "Make America Great Again." Nevertheless, caution is needed here: Leaving the "policing" job in the world's most volatile and turbulent parts to un-free regimes such as Russia, China, Iran and Turkey could also damage the quest of America and others in the free world to become great again -- and to remain free. The free world simply does not have the luxury -- even in remote geographical areas -- of allowing security to be policed by un-free state and non-state actors.

Published:12/27/2018 1:12:12 AM
[Markets] First China, Now Russia: Kremlin Considers Changing Constitution To Extend Putin Presidency

After last March's not so shocking vote by China's National People's Congress to overwhelmingly pass a constitutional amendment to eliminate China's presidential term limits, paving the way for President Xi Jinping to stay in power after his second term ends in 2023, it appears Russia is now inching toward the same scenario at a moment when, as one Moscow-based analyst put it, “The general sense is that there’s no one to replace Putin as the guarantor of the system.”

Just prior to Russian President Vladimir Putin getting elected to his final possible term allowed under the constitution last March, Newsweek announced The End of The Putin Era is in Sight — looking ahead to the end of his term in 2024 — but even this could be in doubt, perhaps predictably, as this week Russian parliament raised the possibility of altering the constitution as rumors continue to circulate that the Kremlin is seeking ways to keep the popular 66-year old multi-term leader in power.

Putin following his March 2018 reelection for 6 years, his fourth overall term, and his second consecutive, via AFP.

Currently the Russian constitution prohibits a president from being elected for more than two consecutive terms, but on Tuesday during a scripted meeting with Putin the speaker of Russia's parliament, Vyacheslav Volodin, broached the issue, saying according to Bloomberg:

“There are questions in society, esteemed Vladimir Vladimirovich,” Volodin said, addressing Putin in the respectful form, according to a Kremlin transcript. “This is the time when we could answer these questions, without in any way threatening the fundamental provisions” of the constitution, he added. “The law, even one like the Basic Law, isn’t dogma.”

Noting that the current constitution was drafted a quarter-century ago, Volodin continued, “That was a very difficult time. A time when the state stood on the edge of collapse, when social obligations weren’t fulfilled, when our citizens lost faith in the authorities.” He proposed the possibility of a formal review of the constitution overseen by Constitutional Court judges and a panel of experts to examine “how the Constitution and the norms of development of the Constitution suit the tenets that were passed.”

During the meeting Putin didn't appear to give comment in response to the proposal, but it's being widely viewed as the first subtle opening to a process Putin will give a quiet nod to, and analysts suggest a constitutional change could be easily accomplished with the backing of the president. 

When asked about the possibility, a presidential spokesman said Wednesday, “There’s no position on this issue yet” and further noted there's no current amendments being worked on or considered. 

But earlier this month Putin described the constitution as “not some fossilized legal construct but a living, developing organism,” and at a press conference last week vaguely mentioned that any changes to the Basic Law “a matter for broad civic discussion,” according to Bloomberg.

Perhaps the best quote on the issue came last Spring, however, when Putin was presented with a question of his prospects after 2024 just after his reelection to a second consecutive term. He said, “At present I don’t plan any constitutional reforms.” And when asked about seeking office in 2030, as allowed by current law, he quipped, “What am I going to do, stay until I’m 100 years old? No.”

Published:12/27/2018 12:09:38 AM
[Entertainment] Miley Cyrus and Liam Hemsworth Get Funky While Dancing on Their Wedding Night Miley Cyrus, Liam Hemsworth Miley Cyrus broke out some of her best dance moves on her wedding day. Don't believe it? Just watch. The singer shared a video on Twitter of her dancing to Bruno Mars and...
Published:12/26/2018 10:39:02 PM
[Markets] China Selling Hypersonic Anti-Ship Missiles; Travels 6X Speed Of Sound For "Rapid, Precision Strikes"

China has brought to market a hypersonic anti-ship ballistic missile, said to be the first of its kind on the international market for buyers seeking a "reliable and affordable deterrence against threats from the sea," according to

"The system is intended for rapid and precision strikes against medium-size ships, naval task forces, and offshore facilities," said a representative from China Aerospace Science and Industry Corp (CASIC) in November. 

According to CASIC, the CM-401 is fitted with a terminal radar guidance unit featuring a nose-mounted gimballed antenna. Once launched, the missile flies along a ballistic trajectory, reaching a near-space altitude. The weapon is stated to have an average speed of Mach 4 and a peak of Mach 6, although it is not clear at what altitudes these speeds are reached.

The missile flies between 20 and 100 kilometers above earth (12 - 62 miles) and maneuvers at hypersonic speeds. 

Once fired, the missile ascends to a predetermined altitude until its target is identified, before entering an "ultrafast terminal dive" towards the target at hypersonic speeds according to the CASIC.

...the missile flies at an average speed of 1,360 meters per second - 4,900 kilometers per hour - or four times the speed of sound, during most parts of the flight, and reaches a maximum velocity of more than 2,000 m/s, six times the speed of sound as it approaches the target. It can carry a 290-kilogram warhead and has a maximum strike range of 290 km and a hit rate of 90 percent, meaning there will be nine effective hits on target out of 10 shots.

The missile - unveiled at the the 12th China International Aviation and Aerospace Exhibition in Zhuhai, Guangdong province - can be mounted to a variety of platforms, such as ships or land-based launch vehicles according to the company. 

We wonder how China's new hypersonic missile competes with Putin's new toys?

Published:12/26/2018 10:39:01 PM
[Markets] The 7 Space Predictions From Arthur C Clarke That Came True!

Authored by Riz Virk via,

About a year ago, I was visiting Sri Lanka and had the pleasure of visiting Arthur C Clarke’s well-preserved office (you can read about my visit here if you like). Anyone who’s read that piece knows that I grew up as a big fan of Clarke’s science fiction, so it was a thrill to be there and see his books and office. He lived in Sri Lanka for 30 years before his passing in 2008.

This year, I’m unable to travel so far, but visiting my parents’ house in the midwest got me thinking about the times that I used to read Clarke’s science fiction books while growing up?—?imagining I was off with some crew on a “romp through the solar system”.

While there were some elements of Clarke’s books that are way out of our league even today (think star child or childhood’s end), there were always others that seemed like they weren’t too far away. So, this Christmas holiday, I wanted to write about a few things that Arthur C Clarke predicted in his science fiction and science-related works that have (mostly) come true (or will very soon!).

Science Fiction Turns Into Science

Of course, science fiction has always had a way of predicting the future, going all the way back to Jules Verne’s 1865 novel, From the Earth to the Moon. While he didn’t have it exactly right, Verne’s prediction that it would be the Americans who first got to the moon, firing off a giant gun (rockets didn’t exist) from somewhere in Florida, were pretty spot on. And who doesn’t know about the flip phone being a descendent of Star Trek, and today’s facetime and iWatch look a lot like Dick Tracy’s watch-phone, don’t they?

The difference between Clarke’s science fiction and much of these others was that he often put more thought into how these things could work and why they were the way they were?—?relying on them not just for convenience, but drawing on both scientific literature and scientific necessity. Unlike the Transporter in Star Trek, for example, which was created just for convenience (so that the producers wouldn’t have to pay for special effects of shuttles going to planets and back, which were costly), Clarke usually had some well thought out reason for the science fiction elements in his novels.

From ACC himself

Clarke himself once said that “trying to predict the future is a discouraging, hazardous occupation”, and some credit ACC (as he’s know in the science fiction world) with having predicted everything from the internet to email to google!

In this article, I’m going to stick to what ACC did best, write about outer space and aliens!

Now I’m not claiming that Clarke was necessarioly the first to think of all of these things?—?in fact, sometimes he was just the first to put them into popular science fiction even when a paper or a concept existed before.

So, without further ado, here are some predictions that have already (to different degrees, of course) come true:

1. The Gravity Assist Maneuver

In the novelization of 2001: A Space Odyssey, which was written concurrently with the movie (released in 1968), ACC had the Discovery go to one of Saturn’s moon’s (Iapetus) and not to Jupiter. In the movie, Stanley Kubrick (who was collaborating with ACC and wanted to use the latest images from NASA) decided to go with Jupiter as the destination because they had pictures from NASA about what Jupiter looked like. Kubrick was worried that since they didn’t have as many images of Saturn, the film might look dated once NASA got more accurate images.

Just like in the novel 2001, the Voyager probes used Jupiter’s gravity to get to Saturn (src: the Planetary Society)

This is all a bit of history, but I recall reading the novelized version and it was the first time I had heard of the “gravity assist” maneuver. In the novel, the Discovery spaceship uses Jupiter’s gravity to speed itself up on the way to Saturn. While Jupiter is “only” 500 million kilometers away, Saturn can be almost a billion kilometers further away (depending on the position), even though we are used to them being close together . On average, the ringed planet is almost twice as far. This means that the ship didn’t have to carry as much fuel to get all the way to Saturn.

This idea of using planets to “assist” in slinging a spacecraft was actually used by NASA in many probes including the Mariner 10 and Voyager probes. In some cases the probes went inwards towards the sun and used Venus for gravity assist to slow down, while the Voyagers used Jupiter to speed up on their way to Saturn, just like in ACCs novel!

In another of his novels, Rendezvous with Rama (which we’ll talk more about in a minute), an alien spaceship built in an asteroid is using the Sun for a gravity assist on its interstellar mission! ACC wasn’t the first to think about this?—?the Soviets actually used the gravity of the moon for a flyby of a probe in 1959, but his use of it around a planet was the first time many science fiction readers like myself heard about it!

2. The Communication Satellite.

ACC proposed using a satellite in geosynchronour orbit for boucning off radio signals (src: Wikipedia)

Arthur C Clarke, in an article for Wireless World in 1945, proposed the idea of a geostationary communications satellite, which was a satellite that stayed in the same position relative to the earth. Such a satellite, ACC proposed could be used to bounce radio signals off of and send radio signals all over the Earth. The editor of Wireless World changed his paper title to Extraterrestrial Relays.

According to many sources, the idea wasn’t taken seriously at the time as no one knew how to get a satellite into what became know as the “Clarke orbit”. 20 years later, in 1965, the first communications satellite was launched into the Clarke orbit, and today there are over 300 satellites on this orbit!

3. The asteroid from outside the solar system.

In 2017, a controversial object appeared in the night sky and was observed for a matter of weeks. It was determined to be the first known object that came from outside of our solar system. Its strange maneuvers and properties made scientists think it was an elongated (cigar-shaped) type of asteroid or comet or alien space probe?—?we couldn’t be sure which.

Conception of our first interstellar visitor , ‘Oumuamua (src: CNN)

The scenario that astronomers found themselves in seemed eerily similar to ACC’s 1973 novel, Rendezvous with Rama. In the novel, an elongated asteroid was adapted into a space probe by an alien civilization, and wanders through our solar system, planning to use the sun as a gravity-assist maneuver to get where-ever it was going. The probe was abandoned in the book and its sequels by the alien civilization. Astronomers first proposed calling the asteroid discovered last year, which sure looked like it could be an asteroid steered by an alien civilization, Rama. In the end, the name ‘’Oumuamua was chosen (a good name which means “heavenly messenger” or “messenger from the past”), and of course scientists went ahead and stated confidently that there was nothing alien about the object.

It’s a year later and what do we know? The object did in fact swing around the sun, and its velocity increased in a way that wasn’t consistent with the asteroid or the comet hypothesis, leading some including Harvard astronomer Abraham Loeb, professor and chair of astronomy, and Shmuel Bialy, a postdoctoral scholar, at the Harvard Smithsonian Center for Astrophysics to speculate that it was an alien probe after all. It’s acceleration properties were more consistent with the properties of a light sail then either an asteroid or a comet!

So, while we don’t know what it was exactly, the best hypothesis we have that fits the data at present is that it was an alien probe going through our solar system swinging around the sun? Sounds familiar? Maybe it should be called Rama after all!

4. Building Ships in Orbit.

The Discovery from the movie 2001: A Space Odyssey (src: syfy wire)

ACC predicted that it would be much easier to build large space-faring ships in orbit and to use shuttles to get astronauts up to the ships. This is how the Discovery was built in 2001: A Space Odyssey and its successors in the sequels as well. This wasn’t an ACC invention?—?many science fiction writers predicted this. Are we doing this today? Not exactly, but it’s within reach. There are companies who have sent up 3d printers to assemble large structures in space (Made in Space is the company that has printed the largest 3d printed object ever in preparation for printing large structures in space) , and there are near-term plans for inflatable modules which get assembled into large structures in space (think Bigelow Aerospace). Thus far, the ISS is the only such structure that is fully deployed, but this prediction is not very far off.

5. Hal and Conversational Artificial Intelligence.

Who can forget the classic line from 2001, which came from HAL 9000, the on-board artificially intelligent computer: “I’m sorry, Dave, I can’t do that?”

I’m sorry Dave, I can’t Do that?—?the HAL 9000 computer from 2001 (src: wikipedia)

There has been an artificial intelligence explosion in the last 10 years, as machine algorithms are now being used to learn to do everything from drive cars to play video games. ACC wasn’t the first to predict machine intelligence;

MIT Professor and Bell Labs fellow Claude Shannon was one of many who said that someday machines would be able to beat a human grand master at chess and write poetry. The chess thing has happened already, not so sure about the poetry. In the age of Sofia and so many different kinds of AI and virtual influencers and personalities, it seems like an intelligent computer like HAL from 2001, that can converse with us, is not that far off?—?give it 10 to 20 years say some experts.

6. Europa, liquid water, and life.

In the sequel to 2001, called 2010: Odyssey Two and its follow up 2061: Odyssey Three, Clarke scrapped Saturn’s moon Iapetus and made the books sequels to the movie, rather than to his novel. In this sequel, a crew of soviet and American astronauts went to Jupiter to find the Discovery and find out what happened to Dave Bowman and his crew, who had disappeared.

When they got there, one of the moons of Jupiter that is most interesting to them (and to the alien StarChild that Dave Bowman has now become) is Europa, which is found to be covered with ice with oceans underneath. The second book ends wiht a whopper: Jupiter is transformed into a small star and Europa is the reason why, because there is life that can develop here! In a now famous line from the end of 2010: All These Worlds Are Yours Except Europa. Attempt No Landings There.

In 2061, a crew actually goes to Europa, which has developed into a habitable planet thanks to Jupiter’s transformation at the end of 2010 into a small sun, called Lucifer from Earth. Leaving aside the super-intelligent aliens who were responsible for this, Clarke’s predictions about Europa being the most likely place for life in the solar system because of the presence of liquid water under the ice covering the planet has turned out to fairly accurate.

Plumes of water have been seen on Europa (src:

Probes to the Jovian moons have shown that Europa has plumes of water that shoot up from the surface, and it’s estimated that it has a covering of water 100 km thick. Some estimates say that Europa may have more water than the Earth!

Now, what might lie in wait in all that water under the ice? To quote the History Channel’s hit series, could it be … Aliens??

7. Landing on a Comet.

At the beginning of the novel 2061:Odyssey Three, published in 1987, in what I thought was a cool sequence, the spaceship Galaxy is landing on the surface of Halley’s comet which has returned to Earth in (do the Math and you’ll see why the novel was set in 2061!).

Of course, there’s a lot more going on in this novel than the comet, but at the time, this part, along with the rest of the novel was thought of as science fiction. Today, we know that it’s not so far fetched. In 2004, the European Space Agency launched Rosetta, a space probe that was meant to study a comet. Twelve years later, in 2016, the probe not only surveyed a comet, 7P/Churyumov–Gerasimenko, but it managed to hard land on the comet!

I wonder what we’ll be doing in 2061??

OK so there you have 7 predictions that have either already come true, or are very likely to in a decade or two. Not a bad track record. But, of course, science fiction being science fiction, there are still lots of things in ACC’s novels and papers for us to aspire to.

And those are just the ones that have or are likely to come true pretty soon! Wait until we talk about he Space Elevator (Fountains of Paradise), Diamonds in the heart of Gas Giants (2061: Odyssey Three), and interstellar colonization (Songs of Distant Earth), not to mention the tantalizing idea of artifacts hiding on the moon (if you were an ancient Alien visitor to the Earth, where would you put a communications device??).

Published:12/26/2018 9:37:18 PM
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[Markets] Japan Suffered Biggest Natural Population Decline On Record In 2018

As the Bank of Japan finally gives up on trying to hit its inflation target and resigns itself to the deflation that has already loomed over its economy for the past twenty years, the Japanese official birthrate data delivered the latest in a series of alarming milestones: According to government statistics, Japan suffered its largest-ever natural population decline in the country's history during 2018, CNN reported.


Japan's demographic timebomb is hardly a new development: The country has for years struggled with one of the lowest birthrates of the developed world, with deaths far outpacing births, causing its population to shrink for the ninth straight year in 2018. Meanwhile, with 921,000 births, Japan has posted the lowest birth rate since the country began keeping track in 1899 - coming in below 1 million for the third year in a row.

In a sign that the demographic candle is burning at both ends, deaths in 2018 also hit a postwar record high of 1.369 million, cementing a total natural population decline of 448,000 (also the highest ever).

According to international standards, Japan is a "super-aged" nation (more than 20% of its population is older than 65). The country's total population stands at 124 million: but by 2065, it's expected to drop to about 88 million.


To try and reverse this trend, the Japanese government has allocated 2 trillion yen ($18 billion) to expand free preschool for children between age 3 and 5, as well as for children age 2 and under from low-income families. The government also hopes to cut wait times at day care centers, as Prime Minister Shinzo Abe hopes to stop the Japanese population from breaking below 100 million by 2060.

But as the populations of developed nations either stall or shrink, growth is exploding in the developing world - particularly in Africa, where the populations of Nigeria, Uganda, Ethiopia and other nations on the Continent are exploding.

Of course, falling populations mean the per-capita debt borne by Japanese will explode in the coming years, compounding the fact that these demographic trends will make it even more difficult to pay back.

Fortunately, the BOJ has apparently resigned itself to monetizing the country's debt for the foreseeable future.

Published:12/26/2018 8:36:39 PM
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[Markets] Demographic Stagnation: US Population Growth Hits 80-Year Low

Last week, the Brookings Institution published a new report regarding population data from the US Census Bureau. The data showed population change estimates for the year ending in July 2018. Brookings said the national rate of population growth collapsed to its lowest level since 1937, "a result of declines in the number of births, gains in the number of deaths, and that the nation’s under age 18 population has declined since the 2010 census."

This new report comes after recent government data showed geographic mobility within the US is at historic lows. Some states —particularly in the Mountain West—are expanding at a quick rate, but approximately 20% of all states showed evidence of population losses over the last two years.

The aging American population (i.e., those pesky baby boomers) is the broader cause for the downward shift in demographic trends that could cripple the nation in the years and decades ahead.

A historic low for US population growth

The population growth rate of 0.62% for 2017-2018 is the lowest registered since the end of the Great Depression. While the nation’s growth rate has fluctuated through wars, economic upheavals, baby booms, and baby busts, the current rate reflects a further fall that has also registered below the Great Recession low in 2007-2009. 

"These downward growth trends initially reflected declines in immigration as well as lower natural increase (the excess of births over deaths) because the economy was down. But over the past few years, as immigration gained slight momentum, reduced natural increase was more responsible for the overall decline in population growth—as it dropped from 1.6 million in 2000-2001 to just above 1 million in 2017-2018. There were fewer births than in recent decades and more deaths than in earlier years," said Brookings.

The collapse in births could be a result of the millennial generation, who, are still coping with the Great Recession, due to high debt loads, could be putting marriage and children on hold.

Brookings said the long-term trajectory should yield fewer births as millennials progress in age, with proportionately fewer women in childbearing ages. The increase in deaths is more directly related to the nation’s aging population. 

"This leaves immigration as an ever-more-important contributor to national population growth. In 2001-2002, natural increase exceeded immigration by 50% and that was when immigration was slightly higher than this year (1.05 million vs 0.99 million). Because of the recent decline in natural increase, immigration now contributes nearly as much to population growth, and is projected to be the primary contributor to national population growth after 2030 as natural increase continues to decline. Thus immigration—its size and its attributes—will be an important contributor to the nation’s future population that is growing slowly and aging quickly," said Brookings.

The child population is declining both nationally and in 29 states

One consequence of declining births in tandem with an aging population is the slower growth of the nation’s younger population. The census data showed that between 2010 and 2018, the nation’s under-age 18 population declined by 780,000 (1%), while the adult population grew by 19.2 million (8%).

This alarming trend could have severe consequences regarding productivity in the economy, as a shortage of prime-age workers could develop into the early 2020s.

Geographical mobility hits a postwar low

In the "greatest economy ever," the one demographic indicator that would rise should be geographic mobility. However, the latest census data for 2017-2018 showed the percentage of Americans changing residence is at a 1950 low of 10.1%.

Most of this downturn is attributable to local (within-county) moves, which also registered a postwar low, and could represent millennials are “stuck in place." 

"But a new finding this year was the downward trend in inter-county and interstate migration—the types of moves that should accompany a rising labor market. Hence, the nation’s demographic stagnation appears with this indicator as well," said Brookings.

The nationwide population growth slowdown did not occur in all regions.

Two states, Nevada and Idaho, expanded by 2% between 2017 and 2018—continuing a recent boom in the Mountain West, which like other regions, had growth declines earlier in the decade. There were more than 14 states which grew by 1%.

The larger story since 2016 is the number of states which had a declining population: ten in 2016-2017 and nine in 2018, compared with only one or two earlier in the decade. These are states where current birth rates plus immigration could not counteract migration to other parts of the country. They include states like Wyoming, Alaska, and Hawaii in the West; Louisiana, Mississippi, and West Virginia in the South; and large urban states such as New York and Illinois—the latter losing population for the fifth consecutive year.

Brookings said as the natural increase drops, all states will heavily rely on migration from the rest of the US and or even other countries to fuel growth or stave off declines.

An aging, slow-growing future

Brookings said the latest census data should prepare the nation for an era of demographic stagnation and low growth. The most recent national growth rate of .62% is at 80-year lows. The rate is still higher than in countries like Germany, Italy, and Japan; it means that governments must budget more for an aging population.

The report concluded by stating there needs to be a more extensive discussion on US immigration policy because of the future contributions that immigrants will aid in the recovery of  America’s society and economy. Otherwise, if birth rates and immigration do not pick up, the US had not just peaked, but the empire is in terminal decline.

Looking ahead: The business environment of the 2020s will be more volatile and economic swings more extreme.

The collision of demographics, automation, and inequality will transform the nation into an unrecognizable America in the decades ahead. The great transformation is already underway.  

Published:12/26/2018 7:08:00 PM
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[Markets] 4-D Chess? Trump May Get Fed Pause He Desires After "Self-Inflicted" Econ Damage

President Donald Trump may get the interest rate-hike pause he wants after abysmal December performance, softer 2019 economic forecasts, and rumors of Trump firing Fed Chairman Jerome Powell have rattled investors. 

According to Bloomberg, this is "self-inflicted economic damage," by the President. As we noted last week: 

The S&P 500 fell 2.7 percent on Christmas Eve, bringing U.S. stocks to the brink of a bear market after a drop of almost 20 percent from a September peak. Shares rallied Wednesday, snapping a four-day losing streak.

The latest drop came after Bloomberg News reported Dec. 21 that the president had discussed firing Fed Chairman Jerome Powell following the central bank’s Dec. 19 decision to lift interest rates for the fourth time this year. -Bloomberg

While the Fed has offered an economic forecast of 2.3 percent growth for next year, the latest hike was accompanied with a signal that they would likely slow the pace of increases next year.

Bloomberg, meanwhile, thinks the Fed's outlook is likely to be tempered by market volatility as "falling stocks hurt consumption by reducing household wealth," while business confidence may take a hit as volatility rises, the cost of capital goes up, and uncertainty over trade wars factor in. Of course, Trump's ongoing conflict with the Fed will likely contribute as well. 

"The shaken confidence that this market correction reflects is very likely going to affect investment and hiring," said Julie Coronado, founder of Macropolicy Perspectives in New York - who adds that the recent plunge in the stock market will likely dampen 2019 growth forecasts - possibly shifting any further Fed rate hikes into the second half of next year. 

Former Treasury Secretary Larry Summers suggested on Wednesday that his previous odds of a recession of "a bit less than 50 percent" are now at 60%, while knocking Treasury Secretary Steven Mnuchin's weekend announcement that they had made a "liquidity test" call to bank CEOs. 

Bloomberg does note though that other economists remain unconvinced that the market has gone anywhere near levels which would change the Fed's course. 

"The Fed’s threshold for reacting to these types of things is really, really high," said Jeffries senior economist Thomas Simmons, who said that the central bank wants to avoid giving investors the impression that it will roll out the unlimited safety net if shares plunge. "You really have to go back to 1987 to find a time when the stock market influenced monetary policy significantly."

Simmons also suggested that tax selling and low year-end volume may be exaggerating the drop in stocks, adding that "The first couple weeks of January will be telling as to whether this selling in December was technically related or actually fundamentally based." 

Published:12/26/2018 4:05:33 PM
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[Markets] Ray Dalio Puts "Recent Market Moves In Perspective"

Authored by Bridgewater founder Ray Dalio, originally published on LinkedIn

A number of people have asked me to explain what’s now going on in the markets and economy. As you probably know by now, I believe that everything (i.e., all reality) works like a machine with cause-effect relationships that drive what happens, and that to be effective it’s essential to have a good mental model of how those machines/realities work and to have good principles for dealing with them well.  So, I believe that economies and markets work like machines with basic cause-effect relationships (including human nature) interacting to cause their movements.  Since economies are the aggregates of the markets that make them up, to understand how economies work one has to understand how markets work.  My mental model of how markets and economies work is described in brief below and is conveyed more simply in my 30-minute animated video “How the Economic Machine Works” (located here).  In order to help you understand what’s happening now, and more importantly to give you the template I use so that you can use it to figure out what’s happening without me, I’d like you to see it within the context of how the market and economic machines work because if you understand that, you can understand these things on your own.

How the Market and Economic Machines Work

At the biggest picture level, there are three big forces that interact to drive market and economic conditions over time.  They are 1) productivity growth, 2) the short-term debt cycle (which typically takes about 5-10 years), and 3) the long-term debt cycle (which typically takes about 50-75 years).  These factors also affect geopolitics both within and between countries, which also affects the market and economic conditions.

Productivity growth is the most important influence over the long term, though over the short term it doesn’t seem so important because it’s not highly volatile.  Productivity trends higher over time as people learn and become more efficient so they are able to raise the output per hour worked.  As explained in greater depth in “Productivity and Structural Reform: Why Countries Succeed & Fail, and What Should Be Done So Failing Countries Succeed” (located here), a country’s productivity growth is driven by its competitiveness as well as cultural factors.  Competitiveness is mostly a function of the relative value a country offers, most importantly the value of people (as measured by the cost of comparably educated people in other countries).  Culture (i.e., values and ways of operating) is very important because it influences the decisions people make about work, savings rates, corruption, reliability, and a number of other factors that are determinant of, and highly correlated with, subsequent years’ growth rates.  These influences come together to influence the quality of a) the people (through the education system and through the quality of family guidance), b) infrastructure, c) rule of law, and d) market systems—all of which are shown to determine and be highly correlated with subsequent years’ growth rates.  As for what’s happening lately, productivity growth in developed countries has been relatively slow (though in line with what we projected based on these determinants), and is more concentrated in a shrinking percentage of the population and in the area of automation that reduces the need for workers.  These changes have significantly changed the labor markets, widened the gaps between the “haves” and the “have nots,” and raised company profit margins.  (See “Our Biggest Economic, Social, and Political Issue­—The Two Economies: The Top 40% and the Bottom 60%,” located here.)

Credit/debt cycles cause swings around that productivity uptrend.  The way it works is that providing credit provides buying power that fuels spending on goods, services, and investment assets (first), which causes stronger economic activity and higher prices of these things (next).  Providing credit also creates debt, which creates the need to pay back in the form of debt-service payments (that comes later) which in turn lessens the spending on goods, services, and investment assets (later) which leads to weaker economic activity and weaker prices of these things (after).  So, credit/debt boosts growth at first and depresses it later.  Central banks provide it to put on the gas when the economy has lots of slack and is growing slowly, and restrict it to put on the brakes when there isn’t much slack and the economy is growing fast.  For these reasons, the effects of credit/debt on the demand, production, and prices of goods, services, and investment assets are inherently cyclical, which is why we have credit/debt cyclical moves around the earlier-described productivity uptrend.

Basically, these cycles come in two forms: the short-term debt cycle and the long-term debt cycle.

The Short-Term Debt Cycle

The short-term debt cycle lasts about 5-10 years, depending on how long it takes the economy to go from having a lot of slack to not having much, which depends on how much slack it starts off with and how fast demand grows.  In the cycle that we are now in, the expansion has been long because it started from a very depressed level (because the 2008 downturn was so deep) and because growth in demand has been relatively slow (because of the debt crisis hangover, because of the growing wealth gap and spending of those with a lot of wealth having a lower propensity to spend than those with little wealth, and because of other structural reasons).  When slack is reduced and credit-financed spending growth is faster than capacity growth early in the cycle, that leads to price increases until the rate of growth in spending is curtailed by central banks tightening credit, which happens late in the “late-cycle” phase of the short-term debt cycle (where we are now).  At that time, demand is strong, capacity is limited, and profit growth is strong.  Also at that time, the strong demand for credit, rising prices/inflation, and eventually central banks’ tightenings of monetary policy to put the brakes on growth and inflation, causes stock and other asset prices to fall. They fall because all investment assets are priced as the present value of their future cash flows and interest rates are the discount rate used to calculate present values, so higher interest rates lower these assets’ present values.  Also, tighter monetary policy slows prospective earnings growth, which makes most investment assets worth less.  For these reasons, it is common to see strong economies being accompanied by falling stock and other asset prices, which is curious to people who wonder why stocks go down when the economic and profit growth is strong (because they don’t understand how this dynamic works).  That is where we now are in this short-term debt cycle.

More particularly, during the expansion phase of the cycle that we are in, central banks created exceptionally low interest rates, which made it attractive for companies to borrow money to buy their own and other companies’ stocks, which boosted stock prices and has left corporate balance sheets much more indebted.  Additionally, the US corporate tax cuts boosted equity prices even more and increased the budget deficit, which will require the Treasury to borrow much more.  In addition to creating exceptionally low interest rates, central banks printed a lot of money and bought a lot of debt, which supported the markets.  These one-time boosts to the markets and economies—at first via the low interest rates and the central bank purchasing of debt and more recently in the form of corporate tax cuts (in the US economy)—coming in the late stage of this short-term debt cycle when the capacity to produce was constrained—led the Fed to raise interest rates.  Also contributing to the rate rise has been a) the Fed selling off some of the debt that it acquired through QE and b) big corporate borrowings.  As a result, we are now seeing this classic late-cycle strong profit growth and strong economic growth that is accompanied by falling stock prices due to the financial squeeze.  That’s when the cracks in the system begin to appear and what most people never expected to happen starts happening.

Typically at this phase of the short-term debt cycle (which is where we are now), the prices of the hottest stocks and other equity-like assets that do well when growth is strong (e.g., private equity and real estate) decline and corporate credit spreads and credit risks start to rise.  Typically, that happens in the areas that have had the biggest debt growth, especially if that happens in the largely unregulated shadow banking system (i.e., the non-bank lending system).  In the last cycle, it was in the mortgage debt market.  In this cycle, it has been in corporate and government debt markets.  

When the cracks start to appear, both those problems that one can anticipate and those that one can’t start to appear, so it is especially important to identify them quickly and stay one step ahead of them.

Of course psychology—most importantly fear and greed—plays an important role in driving the markets.  Most people greedily switch from buying when things are going up to fearfully selling when they are going down.  In the late-cycle stage of the short-term debt cycle, once the previously described tightening top is made, the cracks appear.  The market movements are like a punch in the face to investors, who never imagined the punch coming, and it changes psychology, which leads to a pulling back and higher risk premiums (i.e., cheaper prices).  Typically, the contraction in credit leads to a contraction in demand that is self-reinforcing until the pricing of asset classes and central banks’ policies change to reverse it.  That normally happens when demand growth falls to less than capacity growth and there is greater slack in the economy.  After central banks ease by several percent (typically about 5%), that changes the expected returns of stocks and bonds to make stocks cheap and it provides stimulation to the economy, which causes stock and other asset prices to rise.  For these reasons, it is classically best to buy stocks when the economy is very weak, there is a lot of excess capacity, and interest rates are falling, and to sell stocks when the reverse is the case.  Because these cycles happen relatively frequently (every 5-10 years or so), those people who have been around awhile have typically experienced a few of them, so this short-term debt cycle is reasonably well recognized.

The Long-Term Debt Cycle

The long-term debt cycle comes around approximately once every 50-75 years and happens because several short-term cycles add up to steadily higher debt and debt-service burdens, which the central banks try to more than neutralize by lowering interest rates and, when they can’t do that anymore, they try to do so by printing money and buying debt.  Because most everyone wants to get markets and economies to go up and because the best way to do that is to lower interest rates and make credit readily available, there is a bias among policy makers to do what is stimulative until they can’t do that anymore.  When the risk-free interest rate that they control hits 0% in a big debt crisis, central banks lowering interest rates doesn’t work.  That drives them to print money and buy financial assets.  That happened in 1929-33 and 2008-09.  That causes financial asset prices and economic activity to pick up as they did in 1933-37 and 2009-now.  In both the 1930s case and our most recent case, that led to a short-term debt cycle rebound, which eventually led to a tightening (in 1937 and over the last couple of years) for the reasons I previously described in explaining the short-term debt cycle.  This time around, the tightening is coming via both interest rate increases and the Federal Reserve reducing its holdings of the debt it had acquired.

For all of the previously described reasons, the period that we are now in looks a lot like 1937.

Tightenings never work perfectly, so downturns follow.  They are more difficult to reverse in the late stage of the long-term debt cycle because the abilities of central banks to lower interest rates and buy and push up financial assets are then limited.  When they can’t do that anymore, there is the end of the long-term debt cycle.  The proximity to the end can be measured by a) the proximity of interest rates to zero and b) the amount of remaining capacity of central banks to print money and buy assets and the capacity of these assets to rise in price.  

The limitation in the ability to print money and make purchases typically comes about when a) asset prices rise to levels that lower the expected returns of these assets relative to the expected return of cash, b) central banks have bought such a large percentage of what there was to sell that buying more is difficult, or c) political obstacles stand in the way of buying more.  We call the power of central banks to stimulate money and credit growth in these ways “the amount of fuel in the tank.” Right now, the world’s major central banks have the least fuel in their tanks since the late 1930s so are now in the later stages of the long-term debt cycle.  Because the key turning points in the long-term debt cycle come along so infrequently (once in a lifetime), they are typically not well understood and take people by surprise.  For a more complete explanation of the archetypical long-term debt cycle, see Part 1 of “Principles for Navigating Big Debt Crises” (link).

So, it appears to me that we are in the late stages of both the short-term and long-term debt cycles.  In other words, a) we are in the late-cycle phase of the short-term debt cycle when profit and earnings growth are still strong and the tightening of credit is causing asset prices to decline, and b) we are in the late-cycle phase of the long-term debt cycle when asset prices and economies are sensitive to tightenings and when central banks don’t have much power to ease credit.


Politics is affected by economics and affects economics in classic ways.  I won’t go into them all now, but I will touch on what I believe is most relevant for us to now consider.  As previously mentioned, when interest rates hit 0%, central banks print money and buy financial assets, which causes these assets to rise.  That benefits those who own financial assets (e.g., the wealthy) relative to those who don’t, which widens the wealth gap.  Other factors such as technology and globalization (which remove the barriers between lower-cost and higher-cost populations) also contribute to the widening wealth gap within countries while narrowing the wealth gaps between counties.  This causes the rise of populism and greater conflicts both within countries and between countries.  Populism can be of the right or of the left.  The conflicts can become harmful to the effective operations of government, the economy, and daily life (e.g., through strikes and demonstrations).  This dynamic can become self-reinforcing because when populist conflicts undermine efficiency it can lead to more conflict and more extreme populism, which is more disruptive, and so on.  Such times at their worst can threaten democracies and favor autocracies as most people believe that a strong leader is needed to get control of the chaos “to make the trains run on time.” For a more in-depth examination of this dynamic, see “Populism: The Phenomenon” (located here).  Because populists are more confrontational and nationalistic by nature, and because domestic conditions are more stressful, the risks of confrontations between countries also rise during such periods.  Over the past few years, we have seen this grow around the world.  The emergence of populism in developed countries classically happens most forcefully late in long-term debt cycles when the short-term debt cycle turns down, which happened in the late 1930s and has a good chance of happening over the next couple of years, perhaps before the next US presidential election.  The outcome of that election will have a big impact on just about everything.

There is another geopolitical principle that is relevant today and was relevant in the 1930s (and many other times before) that was highlighted by the great American political scientist Graham Allison (who was also dean of the Kennedy School of Government at Harvard and is now a professor there), which he calls the Thucydides Trap.  In short, when a rising power gains comparable strength to compete with an existing power, there will inevitably be greater conflict between these countries.  That conflict typically starts off being economic and becomes geopolitical in most ways.  It typically affects trade and capital flows, what is produced where, and military encounters.  “Wars” of various forms happen because there is a conflict between countries to establish which country is dominant in a number of areas and a number of locations (which become hot spots).  Over the last 500 years, there were 16 times when an emerging power developed to become comparable to an existing power, and in 12 of those times there were shooting wars, which determines which country is dominant and which one has to be submissive.  Wars are naturally followed by periods of peace because when a country wins a war no one wants to go to war with that dominant country.  That continues until there is a new rising power to challenge the leading power, at which time there’s a war again to establish which power is dominant.  Hence, there is a war-peace cycle that has shown up throughout history and tracks the long-term debt cycle pretty closely.  China is certainly a rising power that is gaining comparable strength to challenge the US in much the same way as Germany and Japan rose to challenge the weakening “British Empire” and other countries that won World War I.  This sort of conflict has relevant economic implications because anticipations of such circumstances trigger behaviors on both sides that can adversely affect trade flows, capital flows, and supply lines.  This issue is now playing a significant role in the markets and will be with us for the next several years.

In other words, as I see it there are a number of analogous timeless and universal cause-effect relationships that are driving things now that drove things in the 1935-40 period and in a number of times in history, which we should be mindful of.  That doesn’t mean that the future is destined to play out the way it did in the 1940s.  There are certainly levers that can be moved to produce good outcomes.  What matters most is whether there are skilled and wise people who have their hands on those levers.

The Markets’ Connections with the Economy

In order to understand what’s happening and what’s likely to happen in the markets and the economy, it’s essential to understand the relationship between the financial markets and the economy.  The financial system and the economy are inextricably linked because it is the financial system that provides the money and credit that is behind spending.  Think of money and credit as being the fuel that changes demand.

Economic movements are driven by all markets interacting and trying to find their equilibrium levels, in much the same way as the parts of nature interact in a never-ending process of trying to find their equilibria.  They are constantly moving to adjust the supplies and demands of goods, services, and financial assets in such a way that nothing can stay either very profitable or very unprofitable for long.  If a good, service, or financial asset is very profitable for long, the quantities produced and the competition to produce it will increase, eliminating that excessive profitability, and if making it is unprofitable, the reverse will happen.

At the big picture level, there are three important equilibria that must be achieved or big changes will eventually occur to lead them to adjust toward these things being in equilibrium.  Governments have two levers to use in order to push them toward equilibrium—monetary and fiscal policy.  By understanding these three equilibria and these two levers, and by understanding how they influence each other, one can pretty well see what will come next.

The three most important equilibria are:

1)    Debt growth is in line with the income and money growth that is required to service debts.  Debt growth itself isn’t a problem.  More specifically, a) if the debt is used for purposes that produce more cash inflow than the cash outflow due to the increased debt service then there will be a net benefit, and if the reverse is true there will be a problem, but b) if debt growth is at rates that finance spending rates that do not produce the cash flows to pay for debt service, it will be unsustainable and big changes need to occur. 

To be sustainable, debt growth must happen in a balanced way.  Borrowing and lending has to be good for both debtors and creditors.  When debt growth is too slow, investing and spending will not be enough for the economy to reach its potential, yet when debt growth is persistently higher than the growth rate of the income that is required to service the debts, demand will be unsustainable and debt problems will follow.  For these reasons, the equilibrium rate of debt growth is that which is in line with the growth in the income that is required to service the debt.  Because incomes are volatile, this cannot be precisely calibrated, which is why having savings (e.g., for a country, foreign exchange reserves) is important.

2)    Utilization of the economy’s capacity is neither too high nor too low.  Too much spare capacity (lots of unemployed workers, idle factories, etc.) is a painful set of economic conditions.  Over time, it will spur unrest and policy makers to act to improve conditions (through the levers described below), and it will lead to pricing adjustments until using up the spare capacity is profitable again.  Too little spare capacity creates undesirable inflation pressures, which spurs central banks to try to limit demand growth by tightening credit.

3)    The projected return of cash is below the projected return of bonds, which is below the projected return of equities by appropriate risk premia.  These spreads in expected returns are important for the healthy functioning of capital markets and the economy because they create the incentives to lend, borrow, and produce.  Remember that economies work because people are trading things that they have for things that they want more, based on the relative appeal of those things.  This is no different when it comes to financial assets.  Investors will demand higher returns for riskier assets, since the extra risk makes the assets less appealing otherwise.  The size of the spreads between the expected return of cash and the expected returns of risky assets will determine how much capital will move where and drive the movement of money and credit through the system.  In fact, most financial decisions are made by financial intermediaries trying to grab this spread, and it is therefore a big driver of credit growth, asset class returns, and economic growth.

Appropriate spreads are required for the capitalist system to work.  In essence, one person’s return is another person’s cost of financing.  The economic machine works by central banks making cash available to those who can borrow it and generate higher returns than they have to pay back in interest.  These spreads cannot be too large or too small because if they are too large they will encourage too much borrowing and lending and if they are too small they will lead to too little.  Because short-term interest rates are normally below the rates of return of longer-term assets, people borrow at the short-term interest rate and buy long-term assets to profit from the spread.  These long-term assets might be businesses, the assets that make these businesses work well (e.g., capital investments such as factories or equipment), equities, etc.  Because of the borrowing and buying, the assets bought tend to go up, which rewards the leveraged borrower.  That fuels asset price appreciation and most economic activity, and leads to the building of leveraged long positions.  By contrast, if the expected returns of cash rise above the expected returns of bonds and/or above the expected returns of equities, investors are rewarded for holding on to cash and economic contractions will occur because the lending that would have been done instead is slowed.

While there is normally a positive spread between the expected returns of equities and bonds and bonds and cash, that can’t always be the case.  If short-term interest rates were always lower than the returns of other asset classes (i.e., the spreads were always positive), everyone would run out and borrow cash and own higher-returning assets to the maximum degree possible, which would be unsustainable.  So there are occasional ”bad“ periods when that is not the case, at which time both people with leveraged long positions and the economy do badly.  As I’ll describe below, central banks typically determine when these bad periods occur, just as they determine when the good periods occur, by affecting the spreads through their use of monetary policy.  They have recently made such a bad period in order to put the brakes on the economy and markets.

These three things—i.e., 1) debt service obligations in relation to cash flows needed to meet them, 2) demand relative to the capacity to meet it, and 3) the relative attractiveness of each of the different capital markets for both those who seek to invest their money well and those who seek to get funding well—fluctuate around their equilibrium levels in an interactive way, with the pushing for equilibrium in one shoving the other out of equilibrium.  If these conditions remain out of equilibrium for long, intolerable circumstances will ensue, which will drive changes toward these equilibria.  For example, if the economy’s usage of capacity (e.g., labor and capital) remains low for an extended period of time, that will lead to social and political problems, as well as business losses, which will produce change until the equilibria are reached.  The US in the Great Depression is a classic example of this process: at first the US provided too little stimulation, until the resulting deep depression brought about the election of President Franklin Roosevelt, who subsequently printed money and devalued the dollar to stimulate the economy.

The two levers that governments have to help bring about these equilibria are:

  • Monetary policy: Central banks change the quantities and pricing of money and credit to affect economic activity, the value of assets, and the value of its currency.  They do this primarily by buying debt assets, thus putting more money into the system and affecting the spreads in expected returns of investment assets in the way previously described.  When debt growth is slow and capacity utilization is low, central banks typically add money to the system, which pushes short-term interest rates down in relation to bond yields, which are made low in relation to expected equity returns (i.e., “risk premia” are high).  Those who acquire this liquidity buy assets that have higher expected returns, pushing their prices up and increasing lending.  Higher asset values make people wealthier, which encourages lending and spending.  Conversely, when debt growth is too fast and capacity is too tight (so inflation is rising), central banks do the reverse—i.e., they take “money” out of the system, making cash more attractive relative to bonds, which makes bonds more attractive relative to equities, which causes asset prices to fall (or rise less quickly) and lending and spending to slow. There are three types of monetary policy that central banks progressively turn to: interest rate policy (which I’ll call Monetary Policy 1), quantitative easing (Monetary Policy 2), and finally monetary stimulus targeted more directly at spenders (Monetary Policy 3).  Interest rate policy is the most effective type because it has a broad effect on the economy.  By reducing interest rates, central banks can stimulate by a) reducing debt-service burdens, b) making it easier to buy items bought on credit, and c) producing a positive wealth effect.  As explained earlier, when short-term interest rates hit 0%, central banks go to quantitative easing (Monetary Policy 2), in which they buy bonds by “printing money.” This form of monetary policy works by both injecting liquidity into the system (which can reduce actual risks), as well as by pushing down the spreads on bonds relative to cash, which can drive investors/savers into riskier assets and produce a wealth effect.  Monetary Policy 2 is most effective when risk and liquidity premia are large, but its effectiveness is diminished when spreads between assets are low, because at that point they cannot be pushed down much further so as to produce a wealth effect and induce people to spend.  At that point, central banks can target stimulation at spenders directly instead of investors/savers (Monetary Policy 3), by providing money to spenders with incentives for them to spend it.  For a more complete explanation of this, see “Principles for Navigating Big Debt Crises.”
  • Fiscal policy: Governments can impact the economy through their spending on goods and services, taxation, and legal structural reforms (by affecting regulations).  While central banks determine the total amount of money and credit in the system, central and local governments influence how it is distributed.  They get their money by taxing and borrowing, and they spend and redistribute it through their programs.  How much they tax, borrow, and spend, and how they do it (e.g., what gets taxed how much and how they spend their money) also affects the economy.  When they spend more and/or tax less, that is stimulative to the economy, and when they do the reverse, that subdues the economy.  For example, the Trump administration’s big corporate tax cuts had a big effect on market prices and through it economic activity.  Governments also make laws that affect behavior (e.g., create regulations that affect safety and efficiency, create rules that govern labor markets).  When structural reforms remove impediments and improve a country’s competitiveness, it helps improve long-term productivity growth.  Fiscal policies can either help or hurt economic activity.

In the short term, policy makers’ use of these levers can either keep economies away from these equilibria (if they act too slowly or inappropriately) or can help speed up the adjustments (if their actions are timely and appropriate).  Understanding these equilibria and levers is important to understanding the market and economic cycles.  By seeing which equilibria are out of whack, one can anticipate what monetary and fiscal policy shifts will occur, and by watching these shifts one can anticipate what the changes in these conditions will be.

I hope this explanation of my template and what is happening now in light of it has helped you to put things in perspective and, more importantly, will help you independently put things in perspective in the future.

Published:12/26/2018 3:36:31 PM
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Published:12/26/2018 3:05:36 PM
[Entertainment] Paul Calafiore Slammed by Danielle Maltby's Rep Over Cheating Scandal Danielle Maltby, Paul CalafioreDanielle Maltby's publicist is speaking out about Paul Calafiore's behavior. Lori Krebs, who also represented Paul, took to social media on Wednesday to address the ongoing drama...
Published:12/26/2018 2:37:13 PM
[Entertainment] Meghan Markle Gives an Update on Her Due Date Meghan Markle, Christmas Day Meghan Markle is in the home stretch of her pregnancy. Kensington Palace announced in October that the Duchess of Sussex was pregnant and her and Prince Harryb's first child was due...
Published:12/26/2018 2:06:51 PM
[Markets] Why Stocks Are Soaring: A Massive, $64 Billion Buy Order

Last Friday, when stocks were tumbling, we reported "some good news for the bulls" which was lost in the overall chaos over the latest mutual fund liquidation discussed earlier.

And no, we did not anticipate that President Trump would activate the Plunge Protection Team over the weekend: the good news in question was that as Wells Fargo calculated U.S. defined-benefit pensions fund would need to implement a "giant rebalancing out of bonds and into stocks" - in fact the biggest in history - with the bank estimating roughly $64 billion in equity purchases in the last trading days of the quarter and year, prompting the banks to ask if traders are about to make pension rebalancing "great" again.

Judging by today's market action, the answer is a resounding yes, even though as Wells warned investors and traders looking for a desperately needed respite from market gyrations "may have to deal with yet one more seismic bout of volatility before Dec 31 finally pops up on their calendar dials."

For those who missed our Friday post on the topic, Wells explained where this massive rebalancing comes from: the huge, end-of-quarter buy order was precipitated by the jarring divergence between equity and bond performances both in Q4 and the month of December. The stocks in the bank's pro forma pension asset blend had suffered a 14% loss this quarter, including about an 8.5% drop in December. Contrast this with a roughly +1.6% quarterly total return for the domestic aggregate bond index. The gap between equity and bond performance in pension portfolios would have been even larger had IG credit OAS not widened nearly 40 bps in Q4.

As a result of this need for massive quarter-end rebalancing, corporate pensions would need to boost their equity portfolios by as much as $64 billion into year-end. Getting a bit more granular, Wells analyst Boris Rjavinski wrote that domestic stocks – both large cap and small cap – may need disproportionately large boosts of $35 billion and $21 billion, respectively, compared to “only” $9 billion for global developed equities (see table below). This is driven by large performance gaps within equity markets: U.S. stocks have trailed global and EM equities in Q4 and December after outperforming the ROW for quarters on end.

Meanwhile, in part explaining today's bond market weakness,pensions would be looking at a historically large outflow of about $57 billion.

Some pensions rebalance every month and some only at quarter-end. Since bonds trounced equities both on a quarterly and monthly basis, the flows from the two groups of rebalancers will go the same way. This should amplify the market impact.

Finally, we also touched upon what assets pensions would buy (and sell): according to Wells, most of the initial outflows from fixed income would be affected via liquid Treasury futures contracts. Consequently, the TY and U.S. sectors should underperform potentially for most of the brief trading window this week.

Finally, while not directly related to today's massive pension-driven buying spree, Wells laments that defined-benefit company pensions just cannot seem to catch a break, and notes that just a few short months ago, corporate pensions’ average funding ratio seemed poised to top 90% and stood at 88% in July, up from 85% at the end of 2017.

Alas, the good fortune proved fleeting, and the updated Well Fargo estimate pegs average solvency at 83%. The drop for 2018 is no surprise with equities posting hefty declines while long-term Treasury yields are up only 30-35 bps.  As a result, pension trustees face an unenviable task of going back to the drawing board, while company Treasurers may be looking at writing another sizeable check to shore up their pensions.

We concluded our Friday post as follows:

For now, however, buckle up for what may be the single largest quarter-end pension rebalancing in history.

A few days later, with pensions seemingly deciding to take Christmas Eve off, Wednesday's torrid price action - and that over the next two days with quarter and year-end imminent - is the result of this "single largest quarter-end pension rebalancing in history", which is manifesting itself in the biggest percentage gain in the Dow since late March.

Or, as Trump would tweet, "pensions are BTFD today. Are you?"

Published:12/26/2018 2:06:51 PM
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Published:12/26/2018 1:35:12 PM
[Markets] Air Force One Spotted Over Europe, Seen Headed Towards Turkey

Air Force One has been spotted flying over Yorkshire, England early Wednesday in what appears to be a flight headed towards Turkey, according to WikiLeaks and flight trackers - which later noted that the plane has disappeared. 

A Boeing 747 with call sign RCH58 left Joint Base Andrews at approximately midnight Eastern time, and was seen over Hungary at approximately 9:30 a.m. Eastern time. 

"The Boeing 747 usually used by Trump for Air Force One is currently moving towards Turkey," tweeted WikiLeaks

The unannounced flight has led to wild speculation, particularly considering the fact that Turkish President Recep Tayyip Erdogan invited President Trump to visit Turkey following the announced US troop withdrawal from Syria. 

Others have speculated that Trump could possibly be on his way to visit troops in Iraq for a belated Christmas.

"Nothing for around 3 hours now on 'RCH358'. Could have landed for fuel, swapped hex codes to another ID, gone out of receiver coverage or simply switched off the transponder," tweeted flight tracker @CivMilAir, which noted that there "was no Marine posted outside the West Wing" today.


Published:12/26/2018 1:35:12 PM
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Published:12/26/2018 1:04:50 PM
[Markets] Oil Soars Most In 2 Years After Russian Reassurance, Stock Surge

Aided by the exuberant buying-panic in stocks and reassurances from Russia's energy minister, WTI prices are soaring (over 7%) today, breaking above $46.50 in its biggest daily jump since Dec 2016.

Russian Energy Minister Alexander Novak said the market will be more stable in the first half of 2019 and suggested cooperation among OPEC and its allies in supporting the market.

Sending crude prices soaring...

“Cooler heads are prevailing here,” said Phil Flynn, senior market analyst at Price Futures Group.

"Some of the selling was overdone.”

The chance of an extraordinary meeting by OPEC and its allies is “sending a signal to the market that they will do whatever it takes.”

Energy stocks are following suit...

Very thin seasonal-norm volume is not reassuriung that this is anything but a squeeze for now however.





Published:12/26/2018 1:04:50 PM
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Published:12/26/2018 12:39:04 PM
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[World] Celeb Santas: Mark Ruffalo, Jennifer Lawrence and more stars spread holiday cheer A number of stars have secured themselves spots on Santa's "nice" list by doing good deeds this holiday season.
Published:12/26/2018 12:07:25 PM
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Published:12/26/2018 12:07:22 PM
[Markets] Das: The World Will Pay For Not Dealing With Debt

Authored by Satyajit Das via,

Inventive policymaking has only made the problem worse, guaranteeing that any eventual restructuring will be all the more painful...

Markets, to paraphrase Nobel prize-winning economist Thomas Schelling, often forget that they keep forgetting. That’s especially true when it comes to the intractable challenges posed by global debt.

Since 2008, governments around the world have looked for relatively painless ways to lower high debt levels, a central cause of the last crisis. Cutting interest rates to zero or below made borrowing easier to service. Quantitative easing and central bank support made it easier to buy debt. Engineered increases in asset prices raised collateral values, reducing pressure on distressed borrowers and banks.

All these policies, however, avoided the need to deleverage. In fact, they actually increased borrowing, especially demand for risky debt, as income-starved investors looked farther and farther afield for returns. Since 2007, global debt has increased from $167 trillion ($113 trillion excluding financial institutions) to $247 trillion ($187 trillion excluding financial institutions). Total debt levels are 320 percent of global GDP, an increase of around 40 percent over the last decade.

All forms of borrowing have increased — household, corporate and government. Public debt had to grow dramatically to finance rescue efforts after the Great Recession. U.S. government debt is approaching $22 trillion, up from around $9 trillion a decade ago — an increase of 40 percent of GDP. Emerging market debt has grown as well. China’s non-financial debt has increased from $2 trillion in 2000 (120 percent of GDP) to $7 trillion in 2007 (160 percent of GDP) to around $40 trillion today (250 percent of GDP).

U.S. non-financial corporate borrowing as a share of GDP has surpassed 2007 levels and is nearing a post-World War Two high. Meanwhile, the quality of that debt has declined. BBB-rated bonds (the lowest investment-grade category) now account for half of all investment-grade debt in the U.S. and Europe, up from 35 percent and 19 percent, respectively, a decade ago. Outstanding of CCC-rated debt (one step above default) is currently 65 percent above 2007 levels. Leveraged debt outstanding (which includes high-yield bonds and leveraged loans) stands at around $3 trillion, double the 2007 level.

Today, the world doesn’t have many options left. In theory, borrowers could divert income to pay off debt. That’s easier said than done, given that very little of the debt assumed over the last decade was put to productive uses. As wages stagnated, households borrowed to finance consumption. Companies borrowed to finance share buybacks and acquisitions. Governments borrowed to finance current expenditure, rather than infrastructure and other strategic investments.

A sharp deleveraging now would risk a recession, making repayment even more difficult. Shrinking the pile of public debt, for example, would require governments to raise taxes and cut spending, which would put a damper on economic activity.

In theory, strong growth and high inflation should reduce debt levels. Growth would boost incomes and the debt-servicing capacity of borrowers. It would reduce debt-to-GDP ratios by increasing the denominator. Where real rates are negative (with nominal rates below the level of price increases), inflation would reduce effective debt levels.

Since 2007, however, attempts to increase growth and inflation have had only modest success. Monetary and fiscal measures, however radical, have their limits. They can minimize the effects of an economic dislocation but can also damage long-term growth prospects. Since the 1990s, too, much economic activity has been debt-driven. Credit intensity is rising: It now requires increasingly higher levels of debt to generate the same level of growth. Efforts to reduce that debt risk an economic contraction, rather than a boom.

Finally, where debt is denominated in a national currency but held by foreigners, countries could slash that debt by devaluing their currencies. The problem is that everyone knows this: Since 2007, a multitude of nations have sought to engineer cheaper currencies in order to boost their competitive position and devalue their liabilities. That’s produced a stalemate, constraining this option.

The only other way to reduce debt levels is by default. This can either be done explicitly — through bankruptcy or write-offs — or implicitly, using negative nominal interest rates to reduce the face value of the debt. Default is almost certainly the likeliest long-term option.

In a default, debt investors as well as banks and depositors suffer losses of savings and income. Financial institutions and pension funds may become insolvent. Retirement income and public services that are paid for by household taxes and contributions won’t be delivered. In turn, this will reduce consumption, investment and the availability of credit. Depending on the size of the write-offs required, the economic and social losses could be considerable.

In 2007, policymakers passed up the opportunity to devise a slow, controlled correction because it would have necessitated defaults and creditor losses. That might at least have allowed an equitable sharing of losses, with the most vulnerable protected. Instead, leaders arrogantly gambled that their policy toolbox would make their debt problems disappear. The breathing space they purchased was wasted. Sovereign states used interest rate savings to finance increased expenditures rather than debt reduction.

Now time is working against them. Previous restructurings show that early default helps cauterize the wound, minimize loss and facilitate recovery. The longer the delay, the higher the cost and bigger the adjustment necessary. Not wanting defaults on their watch, policymakers have been less than honest, including with themselves, about the options to deal with unsustainable debt. They’ve effectively transferred the costs to the next generation. One way or another, though, those costs will have to be paid.

Published:12/26/2018 12:07:20 PM
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Published:12/26/2018 11:34:20 AM
[Markets] Stocks Are Panic-Bid

It seems everything is awesome again...

US equity markets are exploding higher - with Nasdaq up a stunning 3.5% - tagging Monday's cash opening level...

With Dow futures up over 600 points...

Thanks to another big short squeeze that started at 11am ET...

What happens next?

Published:12/26/2018 11:34:20 AM
[Markets] Beyond The "Obscene Point": Credit Spreads, Junk Bond Yields Soar

Another day, another rout in the credit market which no longer seems to follow the daily gyrations in stocks but has developed a mind of its own in the past month. And there appears top be just one thing on said mind: selling.

One week after some wondered if we have crossed the "obscene point" in the credit selloff, and it is now time to start waving bonds - both IG and High Yield - in, the answer appears to have been no, because as the chart below shows, Investment-grade bond spreads widened another 3 basis points to 168 basis points on Monday, the highest since June 2016. The index has widened every day since Dec. 14.

At the same time, the spread on the high-yield index rose to 530 bps on Monday, the highest since Aug. 4, 2016, spiking 16 bps higher from the prior day’s close.

And with spreads blowing out even as TSYs were stable, it will not come as a surprise that junk bond yields reached fresh highs on Monday amid turmoil in stock markets, with the YTW closing at 8.07% Monday vs 7.97% on Friday, the highest since April 2016 and now less than 2% away from the yield highs observed in early 2016 during the peak of the energy credit rout in late 2015/early 2016.

While there is still a way to go until we cross recent cycle highs, the concern is that unlike in 2016 when the junk bond plunge was mostly a function of energy credits, this time it is far more widespread and affects names from virtually every sector.

Published:12/26/2018 11:06:39 AM
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Published:12/26/2018 11:06:36 AM
[Entertainment] 2019 Is Almost Here, But Which 2018 Song Reigns Supreme? Vote Now! Drake, Ariana Grande, Post Malone, Cardi BCan you believe it's almost 2019?! The new year is just days away and we are in disbelief at how fast this year has flown by. While we are excited to see what the next year brings,...
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Published:12/26/2018 9:33:27 AM
[Markets] US Economy Snaps As Richmond Fed Plummets Most On Record

Those seeking early indicators of an imminent recession just got it courtesy of the Richmond Fed Manufacturing Index, which tumbled from 14 in November to -8, crushing expectations of a modest rebound to 15, weighed down by drops in the indexes for new orders and shipments.

With analysts expecting the Richmond Fed to print between 12 and 17, the -8 print was a 20 sigma event relative to expectations.

The internals were an unmitigated disaster, with the shipments index print of -25 was its lowest reading since April 2009 even as the third component, the index for employment, rose. Additionally, respondents indicated a deterioration in local business conditions, as this index fell to -25, its lowest reading on record. Most other metrics were dismal:

  • Shipments fell to -25 after 12 the prior month
  • Local business conditions printed the lowest on record at -25 after 5 last month
  • New order volume slowed to -9 after 17 the prior month
  • Order backlogs fell to -18 after 15 the prior month
  • Capacity utilization slowed to -16 after 9 the prior month
  • Inventory levels of finished goods increased to 13 after 2 last month
  • Inventory levels of raw goods rose to 15 after 5 last month

The survey results suggested employment growth among many manufacturing firms in December, but firms continued to struggle to find workers with the necessary skills. Respondents expected this problem to continue in the coming months but anticipated continued employment growth as well.

Meanwhile margins continued to get squeezed as both prices paid and prices received by manufacturing firms grew in December, however the growth of prices paid continued to outpace growth of prices received, indicating that profit margins are becoming increasingly squeezed.

And the scariest chart: the monthly change in the composite index was the biggest drop on record.

Was this the first canary in the coalmine to signal the imminent US recession? Look for other high frequency indicators to confirm the sudden slowdown in the US economy.

Published:12/26/2018 9:33:27 AM
[Markets] Chinese Media: Tesla's Shanghai Gigafactory Shows "No Signs of Ongoing Construction"

Despite pro-Tesla propaganda blogs stating that production at the company's new Gigafactory in Shanghai could start "within a year", a new Tweet and video posted by China's Global Times seems to indicate that despite breaking ground in October, the project doesn't appear to be actively moving forward.

On the morning of December 26, China's Global Times posted on Twitter that there were "no signs of ongoing construction work", accompanied by a video of what appears to be leveled out ground showing no workers and no signs of work being done. 

The lack of any construction is despite the Shanghai government issuing an official statement in early December that Tesla could at least "partially" start production at Gigafactory 3 during the second half of 2019, as was initially reported by electrek.

It was unclear why China's most popular state-owned nationalistic tabloid made a point of highlighting Tesla's lack of action: is Beijing sending Musk a message that he better get a move on, or China may "sour" in its favorable relations with the electric carmaker?

In early December, Deputy Secretary of the Municipal Party Committee and Mayor of Shanghai, Ying Yong, had stated after meeting with Tesla China staff, that Tesla had "basically completed land leveling and [was] about to start construction".

But even the Musk cultists at electrek had to point out that the timeline looked optimistic. They concluded in early December:

First of all, the statement is surprising considering the factory status is a flattened piece of land and they expect vehicles to be coming off the assembly line within a year.

It was back in October that Tesla announced that it had secured over 200 acres of land for Gigafactory 3 in China. 

And the Shanghai Gigafactory may not be the only thing that is going not going according to plan for the electric car maker in China. Recall that back in late November, we noted that Tesla's sales in China had plunged an astonishing 70%. Just days ago, we reported that in addition to volunteering to pay for tax credits for customers, Tesla had (again) lowered prices in China, which to us signals either a continued lack of demand, negative impacts from tariffs, or worse: both.

Published:12/26/2018 9:04:24 AM
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Published:12/26/2018 8:38:51 AM
[Markets] Israel Strikes Syria In First Attack After US Announces Pullout

That didn't take long.

On Christmas Day, Israel launched what Bloomberg described as its first airstrike in Syria since President Trump's "shocking" announcement that he would withdraw all US troops from Syrian territory (to the disgust of US national security officials and every neo-con anywhere). The strike targeted an ammunition depot in the Damascus countryside believed to belong either to Iran's Revolutionary Guard, or its Lebanon-based proxy Hezbollah.


According to Syrian and Russian officials, the airstrike was launched from Lebanese territory.

Air defenses intercepted most Israeli missiles, state-run Syrian Arab News Agency reported, citing an unidentified military official. However the U.K.-based Syrian observatory for human rights that monitors the war said three targets were hit, including weapons depots belonging to Iran or its Lebanese Hezbollah proxy, and that projectiles had fallen in the Israeli-occupied section of the Golan Heights.

In response to the US's decision to withdraw, Israeli Prime Minister Benjamin Netanyahu said the IDF would "increase efforts" against Tehran’s entrenchment in Syria as a result.

Israel reportedly launched six f-16 fighters from Lebanese territory to carry out the strike. The Russian Ministry of Defense claimed that 14 of 16 missiles launched by Israel had been intercepted, and that the strike had occurred while civilian planes were landing at nearby Damascus airport, threatening innocent lives. Some projectiles also fell in the Israeli-occupied section of the Golan Heights.

With the US pulling out of Syria, it's widely expected that Iran will benefit, as the country has offered consistent support to Syrian President Bashar al-Assad since the civil war began more than six years ago. Israel has carried out hundreds of air strikes against Iranian targets in Syria since the beginning of the conflict, though it rarely acknowledges the strikes.

Iran is set to reap the rewards of its support for Syrian President Bashar al-Assad in the country’s long civil war, in which Iranian-backed militias including Hezbollah have played a crucial role in the regime’s fight against an opposition insurgency intent on overthrowing Assad.

Israel rarely acknowledges conducting strikes on Syria and its military wouldn’t comment on reports of offensive activity. However it said on Twitter on Dec. 25 that it activated its aerial defense system in response to an anti-aircraft missile launched from Syria.

Israel has yet to acknowledge the strike.

Published:12/26/2018 8:38:51 AM
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Published:12/26/2018 8:03:40 AM
[Markets] WSJ Discovers How Algos Broke The Market

For years, as the market rose in seemingly uninterrupted fashion buoyed by trillions in excess central bank liquidity and algos programmed to buy any dip, virtually nobody - except for a few "fringe", "fake news" blogs - complained about the threat posed by algo trading and the quiet but dire deterioration in market liquidity.

Now that the S&P has finally suffered its first bear market in a decade, the mass media is out in full force looking for scapegoats and, predictably, in an attempt to deflect attention from the biggest, and only, culprit behind each and every bull-bust cycle namely the US central bank, has focused on "computerized trading."

In a front page article, the WSJ is out today with "Behind the Market Swoon: The Herdlike Behavior of Computerized Trading", in which a bevy of WSJ authors, among which the paper's new 'Fed whisperer' Nick Timiraos (who may or may not have been tasked with delivering a piece drawing attention from the inhabitants of the Marriner Eccles building), write that "behind the broad, swift market slide of 2018 is an underlying new reality: Roughly 85% of all trading is on autopilot—controlled by machines, models, or passive investing formulas, creating an unprecedented trading herd that moves in unison and is blazingly fast."

And yes, 85% of this "autopilot" trading also took place on the upside, and yet the WSJ was oddly quiet for years and year.

Of course, to Zero Hedge readers, the story is all too familiar: after all we have covered all of this not just when the market snapped lower, but more importantly, during its levitation phase, setting up the inevitable crash:

Today, quantitative hedge funds, or those that rely on computer models rather than research and intuition, account for 28.7% of trading in the stock market, according to data from Tabb Group--a share that’s more than doubled since 2013. They now trade more than retail investors, and everyone else.

Add to that passive funds, index investors, high-frequency traders, market makers, and others who aren’t buying because they have a fundamental view of a company’s prospects, and you get to around 85% of trading volume, according to Marko Kolanovic of JP Morgan.

In terms of specific downside factors, the collapse in momentum has been explicitly highlighted:

One reason the dynamic might have changed: Many of the trading models use momentum as an input. When markets turn south, they’re programmed to sell. And if prices drop, many are programmed to sell even more.

Of course, the topic of collapsing momentum was widely discussed here just last Saturday, when we said that as a result of the dominance of algo trading, Deutsche Bank argued that momentum has emerged as the most important force in markets, something we have claimed for years:

However, one key reason why trading has become so complicated for most, and certainly the algos, is that there is currently virtually no momentum in the market - with the MTUM ETF which tracks momentum stocks having its worst month and quarter since its 2013 inception - results in making any attempt to piggyback on the market a money-losing trade.

There are the usual quotes from traders who are suddenly very concerned about stuff:

Boaz Weinstein, founder of credit hedge fund Saba Capital Management LP, said the market had been underpricing uncertainty. Now it’s taking into account political issues “at the same time as the Fed is hiking, the economy is slowing, and a lot of people are feeling like the best days for markets are over,” he said.

Mr. Weinstein says there are dangers building in the junk-bond market. One worry, he says, is that so many junk bonds—he estimated about 40%—are held by mutual funds or exchange-traded funds that allow their investors to sell any day they like, even though bonds inside the funds are hard to sell.

When enough investors want to cash out, such a fund has to start selling bonds. But without much liquidity, finding buyers could be hard.

A selloff could start simply, he said. “It has its own gravity.”

It's "suddenly" so bad, in fact, that comparisons to virtually every previous crash are coming out of the woodwork:

Some analysts see similarities to the late 1998 pullback in U.S. stocks that followed a year of turmoil in emerging markets, punctuated by the Asian financial crisis of 1997 and the Russian default of 1998 and culminating in the collapse of the highly leveraged Long Term Capital Management hedge fund.

Others point to the market shakeout in late 2015. Like the current episode, it lacked an obvious trigger and was accompanied by anxiety over the Federal Reserve’s plans to raise interest rates—in that case, the Fed’s first rate increase in nearly a decade. Like this year, the 2015 retreat featured a sharp decline in oil prices and a significant drop in the S&P 500.

And the punchline:

"Electronic traders are wreaking havoc in the markets," says Leon Cooperman, the billionaire stock picker who founded hedge fund Omega Advisors.

There is much more in the full WSJ article, which also focuses on the collapse in market liquidity (which we covered just last week), the equity contagion to credit markets (which we also just covered)

Odd how electronic traders were not "wreaking havoc in the markets" when the markets were rising. A cynic may almost say that the president, the Fed and/or traders such as Cooperman (who have had an abysmal year) are desperate for a diversionary cover, and hence the WSJ article finally reporting on the other key facet of what made market levitation possible for the past decade: HFTs, algos and various other computerized traders, which however merely do what their human programmers instruct them to do, and which is to simply accentuate momentum either up, or as the case may be for the past 3 months, down by frontrunning key shifts in investor sentiment (as a reminder, all HFTs really do is frontrun orderflow) and in the process confirming that instead of adding liquidity to the market, HFTs were notorious in soaking it all up as recent market moves demonstrate.

In any case, we are content that the mainstream press is finally reporting on the event which we have warned for the better part of the past 10 years will ultimately catalyze the next big crash - the takeover of the market by computerized trading - a crash which, however, will only be made possible by the Fed blowing the biggest asset bubble in history to monstrous proportions, something which the WSJ article does at least acknowledge in its final paragraph:

“It’s not just about the equity market throwing a temper tantrum, it’s far deeper than that,” said David Rosenberg, chief economist at Gluskin Sheff & Associates in Toronto. “This is a much broader global liquidity story.”

Encouraged by signs of economic strengthening, the Fed has been gradually raising interest rates from rock-bottom levels and selling back the trillions of dollars in bonds it bought in the postcrisis years. The central bank says the roll-back of stimulus is smooth. Others aren’t so sure what comes next. There has never been such a huge stimulus, and one has never before been unraveled.

Some believe there's a hidden risk in debt that consumers and companies took on when borrowing was inexpensive. The Fed’s campaigns were  “fundamentally designed to encourage corporate America to lever up, which makes them more vulnerable to rising borrowing costs,” said Scott Minerd, chief investment officer at Guggenheim Partners. “The reversing of the process is actually more powerful,” he said.

Read the full WSJ article here.

Published:12/26/2018 8:03:40 AM
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Published:12/26/2018 7:35:39 AM
[Markets] Collapse In US Home Sales Confirms 'Peak Unaffordability'

Though some signs of softness are beginning to emerge in the US housing market as home sales slump and prices in the hottest, most high-end markets have fallen - a reaction to just how unaffordable home prices across America have become - in most markets, homes have remained at their most unaffordable level since the financial crisis, as a shortage of supply and stagnant wage growth continue to conspire to weaken consumers' home buying power.

A home-price indicator created by ATTOM Data Solutions, which maintains the country's largest property database, showed that the median price for US homes during the fourth quarter was at its most unaffordable level since Q3 2008 - a more than 10-year high. The nationwide home affordability index, which measures the percentage of the average annual wage needed to buy a home compared with the historical average, slumped to 91 during the fourth quarter, down from 94 in Q3 - the third straight quarterly decline.

Across the US, the number of counties where home-price appreciation outpaced wage growth massively outnumbered counties where wages outpaced home price growth (which would make homes in those areas more affordable).


The percentage of counties that registered indexes below 100 (indicating that homes became less affordable compared with long-term averages) fell slightly from the prior quarter - but was essentially flat.

Among 469 U.S. counties analyzed in the report, 357 (76 percent) posted a Q4 2018 affordability index below 100, meaning homes were less affordable than the long-term affordability averages for the county. That was down from a 10-year high of 78 percent of counties posting an affordability index below 100 in Q3 2018.

"While poor home affordability continues to cloud the U.S. housing market, there are silver linings in the local data as home price appreciation falls more in line with wage growth," said Daren Blomquist, senior vice president at ATTOM Data Solutions.

"Affordability improved from the previous quarter in more than half of all local markets, and one in five local markets saw annual wage growth outpace annual home price appreciation, including high-priced areas such as San Diego, Brooklyn and Seattle."

Though their was one silver lining: In more than half of the counties analyzed, the margin of unaffordability improved slightly from Q3.

Counter to the national trend, home affordability improved from the previous quarter in 272 of the 469 counties analyzed in the report (58 percent), including Cook County (Chicago), Illinois; Harris County (Houston), Texas; San Diego County, California; Orange County, California; and Miami-Dade County, Florida.

Home affordability worsened compared to the previous quarter in 197 of the 469 counties analyzed in the report (42 percent), including Los Angeles County, California; Maricopa County (Phoenix), Arizona; Riverside County, California; San Bernardino County, California; and Clark County (Las Vegas), Nevada.

Meanwhile, wages rose faster than home prices in only 22% of markets analyzed.

Annual home price appreciation in Q4 2018 outpaced annual average wage growth in 366 of the 469 counties analyzed in the report (78 percent), including Los Angeles County, California; Cook County (Chicago), Illinois; Harris County (Houston), Texas; Maricopa County (Phoenix), Arizona; and Orange County, California.

The least-affordable counties in Q4 included the usual suspects: Kings County (Brooklyn), New York, Marin County, California (124.1 percent) and Santa Cruz County, California. In all of these counties, just being able to secure a mortgage to buy a home would require plopping down at least 120% of the average wage.

The upshot: While the housing market is showing some signs of weakness after nearly 10 years of torrid gains, across the US, buying a home remains out of reach for most workers.

Published:12/26/2018 6:39:38 AM
[Markets] Holiday Sales Strongest In Years As Consumers Binge On Debt

After several years of disappointing holiday sales, retail analysts told any and all financial media who would listen that this year would be different. With wages finally accelerating at their fastest pace since the financial crisis, and early indicators suggesting a boost in e-commerce ahead of the traditional holiday shopping season, with the National Retail Federation forecasting a sales bump of up to 4.8% to a combined $720 billion for November and December.

And with the holidays having only just passed, one early indicator suggests that the final total might be more optimistic than expected: According to Mastercard SpendingPulse, total US sales (excluding autos) climbed 5.1% between Nov. 1 and Dec. 24 compared with a year earlier. That means US consumers spent some $850 billion overall.


Per WSJ, this suggests that the recent market turbulence and a partial government shut down didn't curb consumers' appetite (though there were a few weak patches during the season, analysts attributed them to the timing of the Thanksgiving holiday).

"Wall Street is running around like a chicken with its head cut off, while Mr. and Mrs. Main Street are happy with their jobs, enjoying their best wage increases in a decade," said Craig Johnson, president of Customer Growth Partners, a retail research and consulting firm. A recent drop in gas prices has helped last-minute spending, he said.

Sales have been generally strong throughout the holiday season, led by increases in online shopping. Retailers entered the holidays with momentum as online sales jumped 26.4% from a year earlier between the Wednesday before Thanksgiving through Black Friday, one sign of an early buying surge, according to Adobe Analytics.

Buying slowed in early December in part because an unusually early Thanksgiving made it harder for retailers to sustain sales through the entire holiday shopping period, analysts and consultants said. But shoppers picked up the pace ahead of Christmas.

The final push arrived relatively late in the season: Given the timing of the Christmas holiday, the ability for consumers to make last-minute purchases online in the days before Christmas Eve - then pick those items up in stores - has been credited with bolstering spending.

Overall, strong growth in online shopping was a major growth factor, as total purchases climbed 20%.

With Christmas Eve falling on a Monday, many retailers geared up to capitalize on a last-minute push from shoppers who were counting on the final weekend to wrap up their gift-buying. Chains including Walmart Inc. and Target Corp. extended deadlines to get online orders delivered before Christmas, while Inc. in some cities offered Prime members the option of free same-day delivery on Christmas Eve.

Many retailers also touted the option to buy online and pick up in store through Christmas Eve. Overall, sales in that category increased 47% from Nov. 1 to Dec. 19, according to Adobe.

Mastercard found that sales from online shopping grew 19.1% between Nov. 1 and Dec. 24 compared with the year-earlier period.

But though analysts might be tempted to cite holiday spending as an example that consumption is stronger than the hard and soft data would suggest, and that the mighty US consumer just might come through and save the US economy from a late-2019 or early-2020 recession, there is one thing to consider: As the latest raft of spending data revealed, spending outpaced incomes once again in November, sending the savings rate lower, suggesting that this latest consumption binge was largely fueled by debt.


In other words, analysts who interpreted these strong holiday sales as one last binge before the end of the business cycle might soon be vindicated.

Published:12/26/2018 6:06:07 AM
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Published:12/26/2018 5:33:11 AM
[Markets] 2019: Europe's Year Of Living Defensively

Authored by Joschka Fischer via Project Syndicate,

With the future of the EU-UK relationship shrouded in uncertainty and crises brewing in France, Italy, and elsewhere, 2019 will be another difficult year for Europe. And if populist forces prevail in the European Parliament election in May, it could be an impossible one.

From a European perspective, 2019 promises to be another difficult year, dominated by large challenges that could easily turn into menacing crises. Barring a major reversal, the United Kingdom will withdraw from the European Union on March 29. A brewing economic and financial crisis in Italy will intensify, threatening the stability of the eurozone. And France will likely remain beset by populist protests, diminishing its potential to take a lead role in the pursuit of EU-level reforms.

Moreover, the European Parliament election in May could well deliver a nationalist majority or near-majority, which would then determine the next members of the European Commission, the leaders of the European Council and European Central Bank, and the High Representative for Foreign Affairs and Security Policy. Needless to say, a nationalist victory would be a disaster for the EU, because it would derail necessary reforms and further divide member states.

Whatever happens, Europe’s internal political drama will play out against a backdrop of international turmoil. At the same time that Russia is stepping up its aggression in eastern Ukraine, US President Donald Trump is waging a trade war against China, and could expand it to the EU (which he has deemed a “foe”). And, more broadly, the global economy is weakening, and growth will continue to slow in the months ahead.

In the face of these foreseeable challenges, the survival of the European project itself is at stake.

As far as Brexit is concerned, much will depend on whether the UK’s withdrawal occurs in an orderly or chaotic fashion. In the latter case, there would be losers all around, and UK-EU relations could be poisoned for a long time to come. No one on either side of the English Channel should wish for this outcome. Life goes on after divorce, and it is generally in the interest of both sides to maintain a healthy relationship. One hopes that common sense prevails.

As with Brexit, the EU leadership in Brussels cannot solve the Italian crisis, but it can and should offer a helping hand. Italy needs growth, which will require full-scale modernization of its economy. Unfortunately, its current government is not pursing policies needed to achieve this, and has instead provoked a confrontation over EU budget rules. The EU will have to show flexibility, while upholding the principles that underpin the sustainability of the monetary union. This suggests that long and excruciating negotiations lie ahead.

In France, the “Yellow Vests” have articulated their demands largely in economic terms, having first taken to the streets to protest against a proposed fuel tax. But the movement also comprises strong “identitarian” elementsthat have seized on feelings of discontent over the loss of traditional ways of life in the age of globalization and European integration. As in most Western countries, these sentiments are concentrated among traditional working- and middle-class voters who have concluded that the post-war social contract is invalid. Hard work no longer ensures economic security and upward mobility.

Western elites will not regain the public’s trust until they offer a response to this loss of trust, without which democracy and its core institutions will not be able to function. Complicating matters further, the global balance of power is quickly shifting from West to East, the climate crisis is intensifying, new digital technologies are revolutionizing how we live and work, and migration and refugee waves are adding fuel to the populist backlash.

But if populist forces have a plan that would enable their object of desire – the traditional nation-state – to address these mounting challenges, they have kept it a secret.

In reality, only a united Europe is up to the task, which is why next year’s European elections are so important. If populism wins, Europe loses.

It doesn’t help that most of the great changes to the international order over the past few decades have come at Europe’s expense. The rise of China and the revolution in artificial intelligence seem to be leaving Europe on the sidelines. So far, the Old Continent has been asleep at the wheel. If it does not wake up soon, it will have lost the chance to harness the forces of change for its own good.

A new era has begun, and this will become increasingly clear over the course of the next year. Traditional European debates can no longer take for granted the strength of the transatlantic alliance or steady progress toward “ever closer union.” Trump’s America has said its goodbyes, and Europe’s old social model is broken, with no replacement on offer. Neither nostalgia for a mythical past nor China’s authoritarian model of governance represents a serviceable alternative.

The crises threatening Europe will unfold relentlessly and for all to see. At best, 2019 will be a year of defensive maneuvering, rather than the start of a European renewal. But in the long run, a reconstructed Europe is the only option. That contradiction will define this age of transition, which brooks no shortcuts or panaceas.

Published:12/26/2018 5:33:11 AM
[Markets] Inside The Temple Of Covert Propaganda: The Integrity Initiative & UK's Scandalous Information War

Authored by Mohamed Elmaazi and Max Blumenthal via,

The Grayzone entered the carefully concealed offices of a covert, British government-backed propaganda mill that is at the center of an international scandal the mainstream media refuses to touch.

Recent hacked documents have revealed an international network of politicians, journalists, academics, researchers and military officers, all engaged in highly deceptive covert propaganda campaigns funded by the British Foreign and Commonwealth Office (FCO), NATO, Facebook and hardline national security institutions. 

This “network of networks”, as one document refers to them, centers around an ironically named outfit called the Integrity Initiative. And it is all overseen by a previously unknown England-based think tank registered in Scotland, the Institute for Statecraft, which has operated under a veil of secrecy.

The whole operation appears to be run by, and in conjunction with, members of British military intelligence.

According to David Miller, professor of political sociology in the school of policy studies at the University of Bristol and the director of the Organization for Propaganda Studies, the Integrity Initiative “appears to be a military directed push.”

“The most senior government people are professional propagandists and spooks,” Miller explained.

“The ‘charity’ lead on this [Chris Donnelly] was also appointed as a colonel in military intelligence at the beginning of the project — a truly amazing fact that suggests this is a military intelligence cut out.”

A minister for the UK FCO has officially confirmed that it has been funding the Integrity Network.

In addition to conducting diplomacy, the FCO oversees both the Government Communications Headquarters (GCHQ) the UK equivalent to the National Security Agency, and the Secret Intelligence Services (SIS) commonly known as MI6.

SOURCE: National Intelligence Machinery, UK government briefing November 2010

The think tank that oversees the Integrity Initiative, the Institute for Statecraft, has also received funding from the British Army and Ministry of Defense.

The entire extremely shady enterprise, as Miller explained, is an elaborate front for the British military-intelligence apparatus. Its covert coordination with friendly politicians and mainstream journalists recalls the Cold War-era intrigue known as Operation Mockingbird.

That scandal involved the unmasking of “more than 400 American journalists who…in the past twenty-five years have secretly carried out assignments for the Central Intelligence Agency,” as Carl Bernstein revealed in a 1977 Rolling Stone report

The exposing of the Integrity Initiative has just scratched the surface of what appears to be a much more sophisticated, insidious, and extremely online version of Operation Mockingbird. With new internal documents appearing each week through a hacker’s organization called Anonymous Europe, the revelations are yielding one of the most potentially explosive national security scandals in recent times.

But even as members of Britain’s parliament thunder with demands for official accountability, the UK and US mainstream media still strangely refuses to touch the story.

Smearing left-wing political figures in NATO member states

The Integrity Initiative claims that it is “counter[ing] Russian disinformation and malign influence,” and indeed, the main players behind it appear intent on hyping the Russian threat to justify ramped up military budgets and a long-term war footing.

Above: An Institute for Statecraft memo emphasizes the need for “ramping up” anti-Russian messaging

But the Integrity Initiative has also trained its fire on perceived subversives inside NATO member states, including the UK.

An article attacking left-wing activists that was listed in the “Recent Posts” section of the Integrity Initiative website

The Integrity Initiative waged a successful covert campaign to destroy the appointment of Pedro Baños to Director of Spain’s National Security Department on the bogus grounds that he was “pro-Kremlin,” thus interfering in the affairs of a fellow EU and NATO member. It carried out the hit job through a hand-picked “cluster” of Spanish politicians and operatives to flood social media and sympathetic outlets with messages demonizing Baños.

Above: an Integrity Initiative document detailing how the group’s clusters destroyed a Spanish national security appointee.

The Integrity Initiative appears to have employed the same tactics to smear left-wing journalists and political figures across the West, including the leader of the UK’s Labour Party, Jeremy Corbyn.

Member of Parliament Chris Williamson – a close ally of Corbyn – is now openly and indignantly calling for “a public inquiry into the Integrity Initiative and similar information war efforts being funded by our government.” 

It is not necessarily illegal for the FCO to direct propaganda towards its own citizenry, according to Miller of the Organization for Propaganda Studies. However, he said that “it is not legal for ministers to effectively direct a charity. Thus, if the MoD through military intelligence are effectively running a charity, that would be contrary to law.” 

An abandoned mill in Scotland covers for an active office in London’s “Temple”

To conceal its potentially illegal activities, the Institute for Statecraft has employed a web of deceptions. Not only did they hide their government funding, the outfit listed a fake location as its address.

Mohammed Elmaazi, a co-author of this piece, discovered the elaborately hidden location of the Institute for Statecraft inside a posh warren of barristers’ offices in London. Elmaazi’s swift ejection from the premises confirmed the lengths that this shadowy organization continues to go to to avoid public scrutiny.

The Institute for Statecraft, is a registered charity in Scotland, whose registered office is listed as being an old mill in Fife Scotland involved in the “manufacture of wood and other products.” David Scott of UK Column news, visited the registered office in Fife only to find a “an empty, semi-derelict, partly demolished, building.”

The partially demolished address at Gateside Mills. Photo: David Scott

While the address in Fife, Scotland appears to be a derelict building, the London address listed in the hacked documents is fully operational, so far as Elmaazi could tell.

He located the offices belonging to The Institute for Statecraft at the Embankment at Two Temple Place in London. It shares offices in the basement of a “spectacular neo-gothic mansion” which is owned or leased by The Bulldog Trust, an organization dedicated to “promoting culture and philanthropy”. This area, known as “the Temple,” is filled with barristers’ chambers and used to serve as the precinct for the Knights of Templar.

A Christmas themed projection lights up the walls of 2 Temple Place. Photo: Mohamed Elmaazi

Elmaazi found the offices on December 6, having nearly given up and becoming convinced that he would discover nothing more than was found at the derelict house in Fife. When he arrived at the location, preparations were underway for some sort of Christmas-themed event to be held in the main building on the ground floor. But upon discovering the signs pointing downstairs to the basement, Elmaazi found himself staring at a door with a sign that read, “The Institute for Statecraft / The Fore.”  

Photo: Mohamed Elmaazi

No comment

Elmaazi rang the Institute for Statecraft’s doorbell and was eventually let in by a well-dressed elderly gentleman in a beige overcoat. The man claimed that he worked neither at The Institute nor at The Fore but at “another organization.” He then called out for “Charles.”  Having walked in, Elmaazi could see a few smaller offices to the side, with a larger planned office with tables and computers around the corner.

A man whom Elmaazi presumed was “Charles” came around the corner and called out, “Yes?” He seemed somewhat confused by the journalist’s presence, understandably so as he was there without an appointment. When “Charles” confirmed that he worked with the Institute for Statecraft, Elmaazi identified himself as a journalist and asked if he would be willing to be interviewed. The request was met with a curt refusal.

“Charles” then guided Elmaazi sternly with his hand back to the entrance. When the journalist repeated his request, he was met with stone silence. And that was that.

A “Charles Hart” is listed as the chairman of the Institute for Statecraft, but no photo is available to confirm that Hart was the same “Charles” that Elmaazi met.

The neocon connection

Two buildings away from the Institute for Statecraft, separated only by the home of British American Tobacco, lies the offices of the International Institute for Strategic Studies (IISS). This think tank is key organ of the Western foreign policy establishment, pushing military interventionism and promoting the Saudi-backed Syrian opposition-in-exile.

Among the funders of IISS is the Smith Richardson Foundation.

This foundation also happens to be a supporter of the Integrity Initiative, providing it with £45,000 (about $56,600 USD) for covert propaganda activities in Europe and the US. 

The Smith Richardson Foundation was founded by billionaire heir to the Vicks fortune, H. Smith Richardson, in 1935. In 1973, the founder’s son, Randolph Richardson – a free market fundamentalist and long-time patron of neoconservative ideologue Irving Kristol – inherited the organization. 

Kristol’s son, William Kristol, is a co-founder of the Project for a New American Century which openly called for the US to assert itself as the single global hegemon following the collapse of the Soviet Union.

Recipients of funding from the Smith Richardson Foundation include a who’s who of neoconservative and militaristic right-wing institutions. The foundation has bankrolled neoconservative outfits like the American Enterprise Institute (to the tune of nearly $10 million since 1998), the Hudson Institute, the Institute for the Study of War, Freedom House, the Hoover Institution, the Foundation for the Defense of Democracies, along with Democratic Party-aligned think tanks like the Center for New American Security and the Center for American Progress.

“To say the [Smith Richardson] foundation was involved at every level in the lobbying for and crafting of the so-called global war on terror after 9/11 would be an understatement,” wrote Kelley Vlahos in a profile of Nadia Schadlow, a former Trump administration deputy national security advisor who previously worked as the senior program director for Smith Richardson.

Smith Richardson complements a roster of international funders backing the Integrity Initiative’s parent organization:

  1. HQ NATO Public Diplomacy, £12,000 for each inaugural workshop = £168,000

  2. Partner institutions £5,000 for each inaugural workshop = £70,000

  3. NATO HQ for educational video films – free provision of camera team

  4. Lithuanian MOD to provide free all costs for their stratcom team for a monthly trip to support a new hub/cluster creation and to educate cluster leaders and key people in Vilnius in infowar techniques = £20,000

  5. US State Dept, for research and dissemination activities (excluding any activity in USA) = £250,000

  6. Smith Richardson Foundation, £45,000 for cluster activities in Europe and USA

  7. Facebook, £100,000 for research and education activities

  8. German business community, £25,000 for research and dissemination in EU countries

A covert asset in the Bernie campaign?

Elmaazi, the co-author of this piece, was not the only reporter to gain momentary access to the Institute for Statecraft’s hidden location at 2 Temple Place. On December 11, five days after Elmaazi’s visit, Kit Klarenberg of Sputnik Radio entered the covert propaganda mill’s neo-gothic offices. As soon as he identified himself as a journalist, he was angrily ejected by an Institute for Statecraft staffer named Simon Bracey-Lane.

“You need to leave right now!” Bracey-Lane barked at Klarenberg. “You haven’t arranged to see us! Go! Right now! Please leave immediately! Leave!”

Bracey-Lane is a 20-something British citizen with no publicly acknowledged experience in intelligence work. But as Klarenberg noted, there are some unusual details in the young staffer’s bio.

In 2016, Bracey-Lane appeared out of nowhere to work in Iowa as a field organizer for the Bernie Sanders campaign for president.

Simon Bracey-Lane being interviewed in Bernie Sanders’ Iowa field office on January 27, 2016

“I spent a year working, saving all my money, just thought I was gonna go on a two month road trip from Seattle to New York and I thought, you know what? I’m gonna stay and work for the Bernie Sanders campaign,” Bracey-Lane told a reporter for AFP on January 27, 2016.

He said that after he decided to work for Bernie, he first went to England to “get a visa and get everything legal,” then came back to join the campaign in earnest.

Bracey-Lane also claimed to AFP, “I’m not sure there’s a place for me in British politics… I’ve never been struck by an urge to work in my own political system.”

However, a February 1, 2016 profile of Bracey-Lane by Buzzfeed’s Jim Waterson said the Brit-for-Bernie “was inspired to rejoin the Labour party in September [2015] when Corbyn was elected leader. But by that point, he was already in the US on holiday.”

It is clearly odd for Bracey-Lane to tell one reporter that he had never had any interest in British politics, while claiming to another that he had been eager to support Corbyn before he joined the Bernie campaign. What’s more, as Klarenberg reported, Bracey-Lane went on to establish a get-out-the-vote effort for various progressive politicians and parties in Britain’s 2017 general election, gaining inside access to a wide array of campaigns.

The contradiction in Bracey-Lane’s narrative raises serious questions about his real role on the Bernie campaign, as does his suddenly transition from progressive politics to a staff position at a military-backed propaganda farm that waged a covert information war on Corbyn and other left-leaning politicians across the West.

An Institute for Statecraft document on “roles and relevant experience” of the outfit’s “expert team” notes that Bracey-Lane conducted a “special study of Russian interference in the US electoral process.” The document does not make clear when that study was conducted, however, it is listed directly next to its author’s history of work with the Bernie campaign.

“At Thanksgiving, I was asked, why are you meddling?” Bracey-Lane remarked to Reuters, referring to his work for Bernie Sanders. “Which is an interesting way to phrase it, but I was happy to answer: it needs meddling with.”

Those comments take on an entirely different meaning now that the former Bernie field worker has been outed as part of a British military-intelligence influence operation.

In the coming days, the Grayzone will take a closer look at the Integrity Initiative’s activity inside the US, and whether it is interfering in American politics as it has done in other NATO member states.

Published:12/26/2018 3:34:22 AM
[Syndicated Posts] President Donald Trump’s Schedule for Wednesday, December 26, 2018

By R. Mitchell -

President Donald Trump has no public events on his schedule, but this page will be updated as they happen. The president and first lady have announced that they will be spending Christmas at the White House. Keep up with Trump on President Trump’s Schedule Page. President Trump’s schedule for 12/26/18 All Times ...

President Donald Trump’s Schedule for Wednesday, December 26, 2018 is original content from Conservative Daily News - Where Americans go for news, current events and commentary they can trust - Conservative News Website for U.S. News, Political Cartoons and more.

Published:12/26/2018 12:31:10 AM
[Entertainment] The Meaningful Way Bode Miller and His Family Honored Their Daughter on Christmas 5 Months After Her Death Bode MillerBode Miller, his wife Morgan Miller and their family honored their daughter Emmy Miller on Christmas in a very meaningful way. Emmy died on July 10 after a tragic drowning accident. The...
Published:12/25/2018 10:02:07 PM
[Entertainment] Bethenny Frankel Becomes Instagram Official With Rumored Boyfriend Paul Bernon Bethenny Frankel, Paul BernonBethenny Frankel has a new man in her life. The Real Housewives of New York City star became Instagram official with her rumored beau, Paul Bernon. The two of them jetted off to the...
Published:12/25/2018 9:03:31 PM
[Markets] China Showcases New Combat Drone; Can Fly 35 Hours Straight Armed To The Teeth

China has rolled out its latest combat drone for its first public flight, after Beijing released footage of the Wing Loong I-D combat unmanned aerial vehicle (UAV), which can carry over 10 different types of weapons (up to 881 lbs) and operate up to 35 continuous hours without refueling.

It is China's first all-composite unmanned aerial vehicle, which Beijing plans to sell to customers worldwide, according to Sina news. 

the Pterosaur-1D is basically compatible with most of the pterosaur-1/2 weapons, including the BA-7 air-to-ground missile, the YZ-212 laser-guided bomb, the YZ-102A killing bomb and the 50 kg LS-. 6 miniature guided bombs -Sina (translated)

One of the missiles is China's BA-7, or Blue Arrow-7 laser guided munition, reported to be one of the most powerful anti-tank missiles in the world according to Chinese media. According to military blog, the BA-7 can destroy tanks with armor as thick as 1.4 meters (55") from nearly 23,000 feet away. 

The UAV can also carry the YZ-102A anti-personnel bomb, YZ-212 laser-guided bomb and a 50kg LS-6 mini guided bomb according to Sina. 

According to Sina, the Wing Loong I-D has a wider wing span of 17.5 metres (57.4 feet), compared to Wing Loong I's 14 metres (45.9 feet). In addition, it can carry an external load of up to 400 kilograms (881 pounds), compared to Wing Loong I's 100 kilograms (220 pounds).

Wing Loong I-D completed its maiden flight at an airport in western China yesterday. 

According to CGTN, which released the video of the flight, Wing Loong I-D flew for about 30 minutes before landing smoothly. -Daily Mail

The Wing Loong's sister aircraft - the Wing Loong II stealth bomber, can be equipped with laser-guided missiles which can destroy targets from 25 miles away, has a top speed of 230 miles an hour, and can fly as high as 30,000 feet according to an earlier report by Xinhua News Agency. It was designed as an answer to the US-deployed MQ-9 reaper. 

For comparison, the General Atomics MQ1-Predator drone has an endurance of 24 hours, a top altitude of 25,000 ft., and can carry three types of missiles (AGM-114 Hellfire, AIM-92 Stinger and AGM-175 Griffin air-to-surface).

General Atomics MQ-1 Predator

The "deadlier" MQ-9 Reaper (sometimes referred to as the "Predator B") can fly as high as 50,000 feet - more than double that of China's new drone, and has 7 hardpoints which can accept over 3,000 lbs of armaments. 

General Atomics MQ-9 Reaper

Just wait till these things get AI...

Published:12/25/2018 9:03:28 PM
[Markets] The World According To The "Adults In The Room" - A Year Of Forever War In Review

Authored by US Army Major Danny Sjursen via,

Leave it to liberals to pin their hopes on the oddest things. In particular, they seemed to find post-Trump solace in the strange combination of the two-year-old Mueller investigation and the good judgment of certain Trump appointees, the proverbial “adults in the room.” Remember that crew? It once included Secretary of State Rex Tillerson, the former ExxonMobil CEO, and a trio of active and retired generals -- so much for civilian control of the military -- including Secretary of Defense Jim Mattis, National Security Advisor H.R. McMaster, and White House Chief of Staff John Kelly. Until his sudden resignation, Mattis was (just barely) the last man standing. Still, for all these months, many Americans had counted on them to all but save the nation from an unpredictable president. They were the ones supposedly responsible for helming (or perhaps hemming in) the wayward ship of state when it came to foreign and national security policy.

Too bad it was all such a fantasy. As Donald Trump wraps up his second year in the Oval Office, despite sudden moves in Syria and Afghanistan, the United States remains entrenched in a set of military interventions across significant parts of the world. Worse yet, what those adults guided the president toward was yet more bombing, the establishment of yet more bases, and the funding of yet more oversized Pentagon budgets. And here was the truly odd thing: every time The Donald tweeted negatively about any of those wars or uttered an offhand remark in opposition to the warfare state or the Pentagon budget, that triumvirate of generals and good old Rex went to work steering him back onto the well-worn track of Bush-Obama-style forever wars.

All the while, a populace obsessed and distracted by the president’s camera-grabbing persona seemed hardly to notice that this country continued to exist in a state of perpetual war. And here’s the most curious part of all: Trump wasn’t actually elected on an interventionist military platform. Sure, he threw the hawkish wing of his Republican base a few bones: bringing back waterboarding as well as even “worse” forms of torture, bombing “the shit” out of ISIS, and filling Guantánamo with “some bad dudes.” Still, with foreign policy an undercard issue in a domestically focused campaign to “Make America Great Again,” most Trump supporters seemed to have little stomach for endless war in the Greater Middle East -- and The Donald knew it.

Common Sense on the Campaign Trail

Despite his coarse language and dubious policy positions, candidate Trump did seem to promise something new in foreign policy. To his credit, he calledthe 2003 Iraq War the “single worst decision ever made” (even if his own shifting position on that invasion was well-documented). He repeatedly tweeted his virulent opposition to continuing the war in Afghanistan and regularly urged President Obama to stay out of Syria. And to the horror of newly minted Cold War liberals, he even suggested a détente with Russia.

Like so much else in his campaign, none of this was from the standard 2016 bullet-point repertoire of seasoned politicians. Sure, Donald Trump lacked the requisite knowledge and ideological coherence usually considered mandatory for serious candidates, but from time to time he did -- let’s admit it -- offer some tidbits of fresh thinking on foreign policy. However blasphemous that may sound, on certain international issues the guy had a point compared to Hillary, the hawk.

During his presidency, traces of his earthy commonsense still showed up from time to time. In August 2017, for instance, when announcing yet another escalation in the Afghan War, he felt obliged to admit that his original instincthad been to “pull out” of it, adding that he still sympathized with Americans who were “weary of war."  He sounded like a man anything but confident of his chosen course of action -- or at least the one chosen for him by those “adults” of his. Then, last week, he surprised the whole business-as-usual Washington establishment by announcing an imminent withdrawal of U.S. troops from Syria.  Whether he reverses himself, as he's been apt to do, remains unknown, but here was at least a flash of his campaign-style anti-interventionism.

How, then, to explain the way a seemingly confident candidate had morphed into a hesitant president -- until his recent set of decisions to pull troops out of parts of the Greater Middle East -- at least on matters of war and peace? Why those nearly two years of bowing to the long-stale foreign policy thinking that had infused the Bush-Obama years, the very thing he had been theoretically running against?

Well, pin it on those adults in the room, especially the three generals. As mid-level and senior officers, they had, after all, cut their teeth on the war on terror. It and it alone defined their careers, their lives, and so their thinking. Long before Donald Trump came along, they and their peer commanders had already been taken hostage by the interventionist military playbook that went with that war and came to define the thinking of their generation. That was how you had to think, in fact, if you wanted to rise in the ranks.

The adults weren’t, for the most part, political partisans. Then again, neither was the militarist playbook they were following. Both Hillary Clinton and Jeb Bush had been selling exactly the same snake oil in 2016. Only Trump -- and to some extent Bernie Sanders -- had offered a genuine alternative. Nevertheless, the Trump administration sustained that same policy of forever war for almost two full years and the grown-ups in the room were the ones who made it so. Exhibit A was the Greater Middle East.

The Same Old Playbook

While George W. Bush favored a “go-big” option of regime change, massive military occupation, and armed nation-building, Barack Obama preferred expanded drone strikes, increased military advisory missions, and -- in the case of Libya -- a bit of light regime-changing. In Trump’s first two years in office, the U.S. military seemed to merge aspects of the losing strategies of both of those presidents.

If Trump’s gut instinct was to skip future “dumb” Iraq-style wars, “pull out” of Afghanistan, and avoid regional conflict with Russia, his grown-up advisers pushed him in exactly the opposite direction. They chose instead what might be called the more strategy: more bombing, more troops, more drone strikes, more defense spending, more advisors, more everything. And if a war seemed to be failing anyway, the answer came straight from that very playbook, as in Afghanistan in 2017: a “surge” and the need for yet more time. As a result, America’s longest-ever war grew longer still with no end faintly in sight.

Given such thinking, it’s odd to recall that those adults in the room were, once upon a time, reputed to be outside-the-box thinkers. Secretary Mattis was initially hailed as such an avid reader and devoted student of military history that he was dubbed the "warrior monk." H.R. McMaster was similarly hailed for having written a book critical of U.S. strategy in Vietnam (though wrong in its conclusions). Both Democrats and Republicans in Washington were similarly convinced that if anyone could bring order to the Trump administration, it would be the ever-responsible John Kelly.

Let’s review, then, the advice that these innovators offered the president in his first two years in office and the results in the Greater Middle East, starting with that presidential urge to pull out of Iraq. You won’t be surprised to learn that U.S. troops are still ensconced there in an ongoing fight against what’s suddenly a growing ISIS insurgency (now that its “caliphate” is no more). Nor has Washington taken any meaningful steps to bolster the legitimacy of the Shia-dominated Baghdad government, which portends an indefinite Sunni-based insurgency of some sort (or sorts) and a possible Kurdish secession.

In Syria, rather than downsize the U.S. military mission in the interest of Trump’s stated wish for détente with Russia and his urge to get the troops out “like very soon,” his administration had more than stayed put. It essentially chose to go with an indefinite American occupation of eastern Syria, including up to 4,000 mainly Special Operations forces backing predominantly Kurdish rebels there. In fact, only recently Mattis and other “senior national security officials” reportedly tried unsuccessfully to talk the president out of his recent tweeted proclamation to end the American role in Syria and withdraw those troops from the country as, it seems, is now happening. In this, he clearly wants to avoid the ongoing risk of war with both Russia and NATO ally Turkey, not to speak of Iran. The Turks continue to threaten to invade the northern Syrian region controlled by those U.S.-backed Kurds, while Russian forces had, alarmingly, exchanged fire with U.S. troops more than once along the Euphrates River buffer zone. The Syrian mission was all risk and no reward, but the adults in the room continued to work feverishly to convince the president that to pull out might create a new “safe haven” not just for ISIS but also for the Iranians.

In Afghanistan, whatever Trump’s “instinct” may have been, after many meetings with his “cabinet and generals,” or what he called his “experts,” the president decided on a new escalation, a mini-surge in that then 17-year-old war. To that end, he delegated yet more decision-making to the very generals who were so unsuccessful in previous years and they proceeded to order the dropping of a record number of bombs, including the first-ever use of the largest non-nuclear ordnance in the Air Force arsenal, the so-called Mother of all Bombs. The results were the very opposite of reassuring. Indeed, the U.S. and its Afghan allies may be headed for actual military defeat, as the Taliban controls or contests more districts than ever, while Afghan government casualties have become, in the phrase of an American general, “unsustainable.”

Now, in a rebuke to those very experts and adults, the president will apparently remove half the U.S. troops in Afghanistan. After so many years of fruitless war, this sensible decision raised immediate alarm among the hawks in Congress and in the rest of the Washington national security establishment.  That decision, plus pulling the plug on the Syrian operation, apparently proved to be a red line for the last adult left standing and Jim Mattis promptly resigned in protest.  For the outgoing secretary of defense, it seems that complicity in Saudi war crimes in Yemen and the murder of Washington Post columnist and Saudi citizen Jamal Khashoggi were passing events.  Trump's willingness to try to end the American role in two failing, dubiously legal quagmires, however, proved to be the general's breaking point. 

Elsewhere, the Trump team has moved ever closer to a regime-change policy in Iran, especially after the replacement of Tillerson and McMaster by the particularly Iranophobic duo of Mike Pompeo and John Bolton as secretary of state and national security advisor. Still, don’t blame any looming Iran disaster on them. Washington had unilaterally pulled out of the Obama-negotiated nuclear deal with that country well before they arrived on the scene. While the grown-ups might not have been quite as amenable to war with Iran as Bolton and Pompeo, they couldn't countenance détente for even a second.

And, of course, all those adults in the room supported U.S. complicity in the Saudi-led terror bombing and starvation of Yemen, the poorest Arab country. They also favored sustained ties with Saudi Arabia and its increasingly brutal crown prince, Mohammed bin Salman. Indeed, despite the recent murder and dismemberment of Washington Post columnist and Saudi citizen Jamal Khashoggi in that country’s embassy in Istanbul, Turkey, and the Senate's increasing disenchantment with the war in Yemen, Mattis remained a vocal supporter of the Saudis. Just before the Senate recently voted to pull U.S. military assistance for the Saudi war, he joined Pompeo in urging that chamber not to abandon Riyadh. In addition, key senators called Mattis’s testimony "misleading" because he “downplayed” the Saudi crown prince’s role in the murder, ignoring the conclusion of the CIA that the prince was indeed “complicit” in it.

So when it comes to outside-the-box thinking about the Greater Middle East almost two years into the president’s first term, the U.S. remains ensconced in a series of distinctly inside-the-box and unwinnable wars across the region.  Trump, however, now appears ready to change course, at least in Syria and Afghanistan, perhaps out of frustration with the ever-so-conventional mess the adults left him in. 

A Militarized Planet

Elsewhere, matters are hardly more encouraging. At a global level, the grown-ups have neither tempered the president’s more bizarre policies nor offered a humbler, more modest military approach themselves. The result, as the country enters 2019, is an increasingly militarized planet. Mattis’s ownNational Defense Strategy (NDS), released in January 2018, represents a blatant giveaway to the domestic arms industry, envisioning as it does a world eternally on the brink of Great Power war.

On that planet of the adults, the U.S. must now prepare for threats across every square inch of the globe. Far from the military de-escalation hinted at by candidate Trump (and suggested again in a recent tweet of his), Mattis’s “2-2-1 policy” has the Pentagon ramping up for potential fights with two “big” adversaries (China and Russia), two “medium” opponents (Iran and North Korea), and one “sustained” challenge (conflicts and terrorism across the Greater Middle East). Few have asked whether such a strategy is faintly sustainable, even with a military budget that dwarfs that of any other power on the planet.

In fact, the implementation of that NDS vision is clearly leading to a new arms race and a burgeoning Cold War 2.0. Washington is already engaged in a spiraling trade war with Beijing and has announced plans to pull out of a key Cold War nuclear treaty with Russia, while developing a new group of treaty-busting intermediate range nuclear missiles itself. In addition, at the insistence of his military advisers, the president has agreed to back an Obama-era “modernization” program for the U.S. nuclear arsenal now estimated to cost at least $1.6 trillion over the next three decades.

So much for a Republican insistence on balanced budgets and decreased deficits. Furthermore, climate-change denial remains the name of the game in the Trump administration and, in this singular case, the adults in the room could do nothing about it. Despite earlier Pentagon reports that concluded man-made climate change presents a national security threat to the country, the Trump administration has ignored such claims. It has even insisted upon substituting the term “extreme weather” for “climate change” in current defense reports. Here, the grown-ups do indeed know better -- the military has long been focused on the dangers of climate change -- but have dismally failed to temper the president’s anti-science policies.

So, as 2018 comes to a close, thanks to the worldview of those grown-ups and the pliability of Trump’s own ideology (except when it comes to climate change), Washington’s empire of bases, its never-ending war on terror, and its blank-check spending on the military-industrial complex were more firmly entrenched than ever.  It will fall to the president -- if indeed he proves to be serious when it comes to a course change -- to begin the long work of (modestly) undoing a planet of war.

The Last Adult?

Looking toward 2019 in a world on edge, here are a couple of thoughts on our future. Expect that Robert Mueller’s future report will find many things to focus on, including plenty of collusion with women, but -- whatever the Russians did and whatever the desires of those around candidate Trump may have been -- no actual collusion of substance with Moscow in election 2016. That will undoubtedly break the hearts of liberals everywhere and ensure -- despite the best efforts of a new Democratic House -- a full Trump term (or two!). Furthermore, whatever “blue-wave” Democrats do domestically, they are unlikely to present a coherent, alternative foreign-policy vision. Instead, prepare to watch them cede that territory (as always) to Trump and the Republicans. Meanwhile, at least until 2021, they will continue to lament the absence of those "adults in the room" and their supposed ability to preserve a respectable foreign policy, which, of course, would have meant war all the way to the bank.

Maybe it’s time to start thinking of those adults as the tools (and often enough the future employees) of a military-industrial-congressional complex that feeds Americans ample servings of endless war, year after year, decade after decade. In truth, in this century presidents change but the failing policies haven't.

Call it the deep state, the swamp, or whatever you like, but bottom line: during Trump's first two years in office, there wasn't, until now, any serious rethinking of American foreign and military policy, not in terms of peaceableness anyway. Trump’s original adults in the room set the table for endless war. Their replacements clearly intended to devour plentiful helpings of the same dishes. Make no mistake, if it were up to those adults, the United States would be ringing in this New Year with yet another copious serving of militarism.  It still may.

I must admit that I find myself in a lonely spot as 2018 ends. I’ve been serving in the U.S. Army during this period, while dissenting from prevailing foreign policy. After spending 18 years in uniform, including tours of duty in both the Afghan and the Iraq wars, and observing a slew of retired generals and policymakers who oversaw those very wars champion yet more (failed) conventional thinking, forgive me for wondering, from time to time, if I weren't the last true adult in the room.

Published:12/25/2018 8:30:57 PM
[Entertainment] Why Kendra Wilkinson Isn't "Looking for Sympathy" on First Christmas Since Hank Baskett Split Kendra Wilkinson, Hank Jr.Kendra Wilkinson isn't here for any pity parties. This the first Christmas the Playboy model has been single since announcing her split from Hank Baskett in April. Wilkinson has been...
Published:12/25/2018 8:00:23 PM
[Markets] The Richest People In The World Lost More Than $550 Billion In 2018

Like the old saying goes: What goes up must come down. And just as the fortunes of the world's wealthiest swelled during the post-crisis era as QE and ZIRP bolstered asset prices, now that trend has been thrown into reverse thanks to the turbulence in global markets during the second half of the year.

According to Bloomberg, even the world's richest individuals failed to find respite from a global market meltdown that has rendered 2018 the "worst year for markets on record."


Bloomberg's Billionaires Index showed that the 500 richest people in the world had a combined $4.7 trllion in wealth as of Friday's close, some $511 billion less than they had at the beginning of the year. With one week left to trade this year, 2018 is set to become the second year since the list was created in 2012 that the world's wealthiest have seen their wealth decline.


At their peak, soaring markets drove the aggregate wealth of the world's wealthiest above $5.6 trillion before the downturn began shortly after the Federal Reserve raised interest rates for the third time this year back in September.

"As of late, investor anxiety has run high," said Katie Nixon, chief investment officer at Northern Trust Wealth Management. "We do not expect a recession, but we are mindful of the downside risks to global growth."

Even Amazon founder and CEO Jeff Bezos, who saw his fortune swell to $168 billion earlier this year, has watched it fall more than $50 billion from the highs as FANG stocks have lead the market lower.

Even Jeff Bezos, who recorded the biggest gain for 2018, wasn’t spared the volatility. His fortune peaked at $168 billion in September, a $69 billion gain. It later tumbled $53 billion - more than the market value of Delta Air Lines Inc. or Ford Motor Co. - to leave him with $115 billion at year-end.

But Bezos' losses were mild compared with Mark Zuckerberg, whose net worth took the biggest hit among the world's tech titans.


The Inc. founder had a better year than Mark Zuckerberg, who recorded the biggest loss since January, dropping $23 billion as Facebook Inc. careened from crisis to crisis. Overall, the 173 U.S. billionaires on the list -- the largest cohort -- lost 5.9 percent from their fortunes to leave them with $1.9 trillion.

Billionaires in Asia lost a combined $144 billion...

Even Asia’s fabled wealth-creation machine stumbled as the region’s 128 billionaires lost a combined $144 billion in 2018. The three biggest losers in Asia all hailed from China, led by Wanda Group’s Wang Jianlin, whose fortune declined $11.1 billion.

Despite the turmoil, Asia continued to mint new members of the three-comma club. The Bloomberg index uncovered 39 new members from the region in 2018, although that status proved short-lived for some. About 40 percent had lost their 10-figure status as of Dec. 7.

...While billionaires in Europe also saw their fortunes decline.

From Zara founder Amancio Ortega to former Italian Prime Minister Silvio Berlusconi, most of Europe’s billionaires saw their fortunes fall. Germany’s Schaeffler family, the majority shareholders of car-parts maker Continental AG, lost the most as extra costs and tough business conditions in Europe and Asia hampered the company’s performance.

Georg Schaeffler and his mother Maria-Elisabeth Schaeffler-Thumann are $17 billion worse off than at the start of the year. That sum alone would place them among the world’s 100 richest people.

Mexico’s Carlos Slim, the majority shareholder of Latin America’s largest mobile-phone operator, also suffered big losses. Once the world’s richest person, Slim now ranks sixth with a $54 billion pile. 3G Capital co-founder Jorge Paulo Lemann saw his fortune drop the most among Latin American billionaires, losing $9.8 billion. But even with that fall, he remains Brazil’s richest person.

Russian fortunes on average fared better. The volatility caused by collapsing oil prices, a flare-up in tensions with Ukraine and tightening sanctions was partially offset by periodic gains. The combined net worth of the country’s 25 wealthiest people was down only slightly, ending at $255 billion, according to the ranking.

One outlier, though, was Russia, where billionaires fared better than elsewhere in the world (though only slightly).

Russian fortunes on average fared better. The volatility caused by collapsing oil prices, a flare-up in tensions with Ukraine and tightening sanctions was partially offset by periodic gains. The combined net worth of the country’s 25 wealthiest people was down only slightly, ending at $255 billion, according to the ranking.

Still, 16 of the 25 Russian billionaires on the Bloomberg index saw their net worth fall in 2018. Aluminum magnate Oleg Deripaska, who remains under U.S. sanctions, lost the most -- $5.7 billion -- and dropped out the Bloomberg ranking of the world’s top 500 richest people.

By contrast, energy moguls Leonid Mikhelson, Gennady Timchenko and Vagit Alekperov added a total of $9 billion. Timchenko, sanctioned in 2014, added 27 percent to his net worth as shares of gas producer Novatek rose 40 percent.

And if the co-CIO of the world's largest hedge fund is right, the aggregate net worth of the world's richest and most powerful individuas could be on track to worsen next year, which would, in our view, only ratchet up pressure on central banks to do whatever it takes to spare the global elite any more discomfort.

Published:12/25/2018 7:03:24 PM
[Markets] Japan Gives Up On Inflation, Now Wants Deflation (Sort Of) To Offset Tax Hikes

Authored by Mike Shedlock via MishTalk,

Today seems straight from the Twilight Zone: First the PPT and now Abenomics in full reverse.

Please consider Japan Finally Concedes Its Crazy Low Prices Can’t Be Beat.

Japan has virtually given up on reaching 2% inflation after nearly six years of trying. An argument gaining ground in Tokyo holds that the inflation goal, once seen as paramount, doesn’t matter so much after all. Inflation excluding volatile fresh food and energy prices was just 0.3% in November, and it has barely budged all year.

Mr. Abe has largely stopped discussing the dangers of deflation, and his government is actually trying to push some prices down ahead of a tax increase set to take effect in October 2019. Mr. Abe’s de facto No. 2, Chief Cabinet Secretary Yoshihide Suga, has called on mobile-phone carriers to lower fees by about 40%—a move that could knock a full percentage point off inflation, according to government estimates.

“There is no change to our stance of seeking the 2% price goal as soon as possible by patiently continuing powerful easing,” Mr. Kuroda said at a November press conference. At the same time, he has started talking more about the potential downsides of aggressive monetary easing,

Still, BOJ officials are hesitant to abandon the target altogether out of fear it could damage expectations and push the country back into deflation, said people familiar with the BOJ’s thinking.

Raising Prices

Torikizoku (Chicken Nobility), raised prices for the first time in 30 years last year, by the equivalent of 16 cents.


"Once prices went up, it wasn’t just the chickens that got skewered. Same-store sales at the chain have fallen more than 5% every month since May and profit fell 76% compared with a year earlier in the most recent quarter."

Abe now wants mobile-phone carriers to lower fees by about 40%, a move that could knock a full percentage point off inflation, so it can raise taxes.

Price Stability

The BOJ does not officially want to abandon its inflation target. And BOJ predecessor, Masaaki Shirakawa saysWhat is more important is…to aim for sustainable price stability in the medium to long term.

Japan is the one nation that seems to have a modicum of price stability. It doesn't want it. Heck, it does not even seem to know it has some stability.

The Fed defines stability as prices forever rising.

This is all straight from the Twilight Zone.

What's Coming?

I do suspect that at some point these sorts of financial shenanigans will "succeed" beyond Japan's wildest expectations with Japan intervening to stop massive inflation.

All it will take is an attitude changes that's arguably long overdue.

For discussion, please see Japan's Red Queen Race.

Published:12/25/2018 6:29:30 PM
[Entertainment] Demi Lovato Glows With Happiness on Christmas Days After Speaking Out About Sobriety Demi Lovato, ChristmasDemi Lovato spent her Christmas surrounded by her family and loved ones--especially her dogs. The "Confident" singer shared photos and videos from her Christmas Eve and Christmas...
Published:12/25/2018 6:29:30 PM
[Markets] They Aren't BTFD: S&P Futures Slide In Early Illiquid Trading

On Christmas Day, president Trump had a simple message for Americans: BTFD. They chose to sell instead.

As we noted earlier, in a presser following his address to U.S. armed forces members on a Christmas Day video conference call, Trump told reporters "we have companies, the greatest in the world, and they’re doing really well. They have record kinds of numbers. So I think it’s a tremendous opportunity to buy. Really a great opportunity to buy."

Alas, following the historic Christmas Eve rout which saw the S&P plunge the most ever on the shortened pre-Christmas session, Americans are clearly not seeing the market as a "tremendous opportunity to buy" and are instead selling futures with the E-mini sliding off the gate when futures trading resumed at 6pm, down as much as 1.1% and touching a session low of 2,316.75 in an early burst of selling before rebounding in what appears to be a session with absolutely no liquidity.

And while it is safe to say that already record low liquidity is even more abysmal than usual, with the Plunge Protection Team now active, the president himself urging Americans to buy stocks, and with hedge funds desperate for at least a little bounce into the final 4 sessions of the year, if stocks still can't stage even a tiny relief rally it will be safe to say that the bear market has indeed arrived.

Published:12/25/2018 6:02:17 PM
[Entertainment] Matching Pajamas, a Pink Bentley and More: How the Kardashian-Jenners Celebrated Christmas Morning True Thompson, North WestTo be a fly on the wall at the Kardashian-Jenner Christmas celebration sure would be fun. On Monday night, Kim Kardashian and Kanye West hosted an epic Christmas party filled with snow,...
Published:12/25/2018 5:30:02 PM
[Markets] Trump Urges Americans To Buy The Dip; Voices Confidence In Mnuchin, Powell

Stocks may have finally found the catalyst they need, if only for a brief relief rally.

Almost ten years after president Obama marked the bottom of the financial crisis, when on the day the S&P hit 666, the president gave the green light to buy stocks on March 6, 2009, saying - rather bizarrely - that "what you're now seeing is profit and earning ratios are starting to get to the point where buying stocks is a potentially good deal if you've got a long-term perspective on it", president Trump also urged Americans to buy the dip when on Tuesday he suggested that the recent swoon in the stock market is a buying opportunity for investors.

"We have companies, the greatest in the world, and they’re doing really well," Trump told reporters at the White House on Christmas Day. "They have record kinds of numbers. So I think it’s a tremendous opportunity to buy. Really a great opportunity to buy."

Trump's invocation to BTFD came one day after the most violent Christmas Eve selloff on record, and the day when the S&P fell not only to its lowest level in 20 months, but also slumped into a bear market. For Trump, the stock market has served as a barometer on his administration, and while he was pointing out virtually every major uptick for the past two years, the recent plunge has infuriated him, leaving him mute on any market-related topic.

But a more important catalyst for a potential Wednesday rally came when Trump appeared to back off on his demands that the Fed stop hiking, which culminated with Trump reportedly seeking to fire Fed Chair Powell and speculation that if the market does not stop falling, Treasury Secretary Mnuchin may also be on the chopping block.

Alongside urging Americans to BTFD, Trump expressed confidence in the Treasury secretary and the Federal Reserve, in an attempt to calm financial markets further roiled after a recent Bloomberg report that the president had discussed firing the central bank’s chairman over raising interest rates.

Asked about Fed Chairman Jerome Powell, Trump said the central bank is “raising interest rates too fast” but he has “confidence” that the Fed will “get it pretty soon.”

Trump was also asked if he has confidence in Treasury Secretary Steven Mnuchin  who sparked a market panic on Monday with his late Sunday statement in which he said he had called the CEOs of the top 6 banks to make sure bank liquidity levels are fine (prompting a frenzy of question what he knows that the rest of the market does not) and followed it up with a call with the Plunge Protection Team on Monday, which however failed to prevent one of the worst one-day routs in history .

Trump's response: "yes I do, very talented guy, very smart person."

While answering questions from reporters at the White House after addressing U.S. armed forces members on a Christmas Day video conference call, Trump also said the Fed is hiking borrowing costs because the "economy is doing so well" - which is accurate, however it is the market that is spooked by the aggressive tightening - adding that U.S. companies are having “record kinds of numbers” and it’s a “tremendous opportunity to buy.”

The remarks represented Trump’s first expression of public support for Mnuchin and Powell since Bloomberg reported last week that the president has discussed dismissing Powell who was recommended by Mnuchin. Overnight, Bloomberg also reported that the president also weighed dismissing Mnuchin, while another said that Mnuchin’s tenure may depend in part on how much markets continue to drop.

Trump’s Oval Office remarks on Tuesday contrasted with an angry tweet on Monday saying "The only problem our economy has is the Fed. They don’t have a feel for the Market, they don’t understand necessary Trade Wars or Strong Dollars or even Democrat Shutdowns over Borders." Previously, Trump had unleashed a litany of complaints about the Fed's rate hiking pace, as summarized in the chart below, raising concerns that the Fed may lose its "independence" if Powell is seen as folding to Trump's demands or if Trump replaces the Fed chair as a result of the recent market drop.

Trump's latest remarks on the Fed may be seen as bullish by the market as they alleviate somewhat concerns that Trump would try to remove Powell, even if the president didn’t explicitly say that he won’t fire the central bank chief. Mnuchin said in a pair of tweets Saturday evening that he’d spoken with the president about the matter, and he quoted Trump saying he didn’t believe he had the authority to remove the Fed chairman.

"Well, we’ll see," Trump said Tuesday when asked about his confidence in Powell. “They’re raising interest rates too fast. That’s my opinion. But I certainly have confidence. But I think it will straighten. They’re raising interest rates too fast because they think the economy is so good. But I think that they will get it pretty soon. I really do. I mean, the fact is that the economy is doing so well that they raised interest rates and that is a form of safety in a way.”

Trump’s "safety" comment is a reference to the Fed's ability to lower rates from higher if and when the economy starts contracting, giving the economy a greater cushion in case of a downturn. This is also known as the "hiking rates now to lower them later" approach.

Incidentally, according to the Fed Funds market, as of Monday's rout, the odds for a January 2020 cut are now higher than for a hike, indicating that the market is now pricing in an easing cycle and/or a recession starting in just over one year.



Published:12/25/2018 3:58:54 PM
[Markets] Top Chinese Banker Warns Against Buying Property "Because There's No More Money To Be Made"

Back in 2017, we explained why the "fate of the world economy is in the hands of China's housing bubble." The answer was simple: for the Chinese population, and growing middle class, to keep spending vibrant and borrowing elevated, it had to feel comfortable and confident that its wealth would keep rising. However, unlike the US where the stock market is the ultimate barometer of the confidence boosting "wealth effect", in China it has always been about housing as three quarters of Chinese household assets are parked in real estate, compared to only 28% in the US, with the remainder invested financial assets, which is also why it has traditionally been Beijing's duty to make sure that home prices appreciate year after year, even if the broader economy is doing poorly.


Which is why a recent warning by a top Chinese banker that the days of steady home price appreciation are now over, should come as the latest flashing red alert of more turmoil to come first for the world's most populous nation and eventually, the rest of the world.

On Sunday, the chairman of a leading Chinese state bank warned Chinese investors not to buy property now because “there’s no money to be made” due to high prices and alarming vacancy rates (an ominous development we first discussed last month in "The "Nightmare Scenario" For Beijing: 50 Million Chinese Apartments Are Empty").

Tian Guoli, the chairman of China Construction Bank, which provides mortgage loans to millions of Chinese households, was quoted by China's portal that the room for further property price rises was limited and it was unwise to buy at current rates.

Tian Guoli, chairman of China Construction Bank

Offering some surprisingly blunt advice which would appear counterproductive to his business model - after all Guoli is incentivized to make as many mortgages as possible - Tian said that "there’s no money to be made if you buy a flat nowadays. If you insist on buying a home, aren’t you trapped at the high price level?" The CCB Chairman was speaking at a forum organixed by Peking University’s Guanghua school of management.

As the SCMP reports, the warning by Tian, who is an alternate member of the Communist Party Central Committee, came at a time when the country is in heated debate about the role of the property market – whether it will lead to an bust or whether it can help shore up the economy.

At the recently concluded Central Economic Work Conference, which disappointed markets without providing any concrete additional stimulus measures, the top leadership promised to build a long-term mechanism for the property market, on the basis that "property is for living, not for speculation", adding that regulations would vary from city to city.

To be sure, China's fascination with housing is understandable: over the past two decades property has proved to be one of the best investments in China, and is the reason why unlike the stock market the bulk of China's household wealth is invested in housing. It is also why, despite occasional government intervention – from purchase restrictions and sales limits to mortgage loan constraints – the average price has soared, making property in Beijing and Shanghai as expensive as London or Tokyo.

However, amid reports of massive housing vacancies as Chinese builders overextended in recent years to prop up GDP resulting in over 50 million empty apartments, there has also been increasing concern that a downturn in the housing market would hit households, banks and developers hard – and this in turn would be a serious threat to China’s state banks and local governments, whose revenues are tied to the property market. Meanwhile, even the smallest turbulence in the market could unleash a furious firesale as builders seek to dump vacant properties: in China, some 22% of the total housing stock is unoccupied, roughly double that of other developed economies.

Meanwhile, the debt keeping China's housing bubble afloat keeps rising, with the value of outstanding real estate loans – including mortgage and development lending – reaching 38 trillion yuan (US$5.5 trillion) by the end of September 2018, or 28% of total lending, according to government data, while just personal home mortgages in China have exploded sevenfold from 3 trillion yuan ($430 billion) in 2008 to 22.9 trillion yuan in 2017, according to PBOC data.

By the end of September, the value of outstanding home mortgages had surged another 18% Y/Y to a record 24.9 trillion yuan, resulting in a trend that as Caixin notes, has turned many people into what are called “mortgage slaves."

The good news is that for now the value of the collateral is higher as the combined value of properties in China, Tian warned, has reached US$40 trillion, larger than the US$30 trillion in the United States; as a result any downturn in housing prices would lead to massive impairments.

Furthermore, adding to the vacancy problem, while many property speculators in the West prefer to rent out their properties to ensure a rental income, in China it is more common to keep newbuilds empty because lived-in properties lose some of their value.

Tian said China still an adequate supply of housing stock, with shortages limited to a few big cities. However, in these cases he said it was important to ensure there were enough rental properties available.

“It is very necessary for large state-owned financial institutions to penetrate into property rental markets,” he said.

Meanwhile, the latest China household finance survey conducted by the Southwest University of Finance and Economics, which was published last week, found that the number of vacant urban homes in China has risen to 65 million units in 2017 from 42 million units in 2011, with the vacancy ratio rising to 21.4 per cent from 18.4 per cent in the period.

China’s small cities had more serious vacancy problems than bigger ones, the research centre found, echoing Tian’s speech. Data from the National Bureau of Statistics showed that the average living area of Chinese urban residents already reached 36.6 square meters in 2016.

* * *

What is most troubling, and what may have spurred Tian's warning, is that despite relatively stable home prices, the foundations behind the housing market are cracking. As the WSJ recently reported, in early December, a group of homeowners stormed the sales office of their Shanghai complex, "Central Washington", whose developer, Shanghai Zhaoping Real Estate Development, was advertising new apartments at a fraction of the prices of the ones sold earlier in the year. One apartment owner said the new prices suggested the value of the apartment she bought from the developer in March had dropped by about 17.5%.

“There are people who bought multiple homes who are now trying to sell one to pay off the mortgage on another,” said Ran Yunjie, a property agent. One of his clients bought an apartment last year for about $230,000. To find a buyer now, the client would have to drop the price by 60%, according to Ran.

Meanwhile, in a truly concerning demonstration of what will happen when the bubble finally bursts, last month we reported that angry homeowners who paid full price for units at the Xinzhou Mansion residential project in Shangrao attacked the Country Garden sales office in eastern Jiangxi province last week, after finding out it had offered discounts to new buyers of up to 30%.

"Property accounts for roughly 70 per cent of urban Chinese families’ total assets – a home is both wealth and status. People don’t want prices to increase too fast, but they don’t want them to fall too quickly either,” said Shao Yu, chief economist at Oriental Securities. "People are so used to rising prices that it never occurred to them that they can fall too. We shouldn’t add to this illusion," Shao added, echoing Ben Bernanke circa 2005.

But the biggest surprise once the music finally stops may be that - as a fascinating WSJ report revealed one year ago -  China's housing downturn is likely far, far worse than meets the eye, as under Beijing’s direction more than 200 cities across China for the last three years have been buying surplus apartments from property developers and moving in families from condemned city blocks and nearby villages. China’s Housing Ministry, which is behind the purchases, said it plans to continue the program through 2020. The strategy, supported by central-government bank lending, has rescued housing developers and lifted the property market.

In other words, while China already has a record 50 million empty apartments, the real number - when excluding the government's own stealthy purchases of excess inventory - is likely significantly higher. It is this, and not China's stock market, that has long been the biggest time bomb for Beijing, and if Trump and Peter Navarro truly want to crush China in their ongoing trade war, they should focus on destabilizing the housing market: the Chinese stock market was, and remains just a distraction.

To summarize:

  • China has more than 50 million vacant apartments
  • Mortgage loans have grown 8-fold in the past decade
  • Prices are kept steady thanks to constant government purchases of surplus inventory
  • China's top mortgage banker is urging his potential clients not to buy as price appreciation is limited
  • Home prices are already cracking, with some homebuilders forced to cut prices by 30%.
  • Homebuyers revolt, forming angry militias and storm homesellers' offices when prices dip

For now, China has been able to maintain the illusion of stability to preserve social order. However, should the housing slowdown accelerate significantly and tens of millions in empty units suddenly hit the market, then the "working class insurrection" that China has been preparing for since 2014...

Published:12/25/2018 3:29:01 PM
[Entertainment] Caitlyn Jenner and Sophia Hutchins Attend Kim Kardashian's Epic Christmas Party Caitlyn Jenner, Sophia Hutchins, Kendall JennerIt was quite the merry time at the epic Kardashian-West-Jenner Christmas party on Monday night. Kim Kardashian took over the reins from her mom Kris Jenner and put her own spin on the festivities....
Published:12/25/2018 3:01:35 PM
[Markets] The Year The Bitcoin Bubble Burst, In Charts... And What Comes Next

2018 was the year the bitcoin bubble burst... again.

One year after Bitcoin, or BTC, exploded from below $1000 to nearly $20,000 last December 2017, the cryptocurrency has lost about 80% of its value. The dramatic fall tops the dot-com bust, when the NASDAQ Composite fell 78% over the course of two years (that said, it is still about 4x higher than where it was 2 years ago). Meanwhile, the rest of the crypto market has largely followed BTC’s lead: the market capitalization of all digital currencies is now hovering around $134bn versus $800bn earlier this year.

For veteran cryptotraders, the following intro from Goldman will be redundant but here it for those who may have slept through the bitcoin mania days of late 2017 and early 2018: BTC remains the largest cryptocurrency, commanding more than half of crypto’s total value. Ripple (XRP)—which is meant to facilitate digital payments—and Ethereum (ETH)—the unit of value on a platform that allows for the creation of “smart contracts”—are the second- and third-largest players, respectively. While the cryptocurrency sell-off was broad-based, those intended to function as a store of value (e.g., BTC) appeared to fare better than “utility tokens,” such as those operating on the Ethereum platform.

Negative headlines likely contributed to crypto declines. While it’s difficult to pinpoint a single driver of crypto’s struggles, a number of negative developments surfaced this year according to Goldman, among which were a series of high-profile hacks of cryptocurrency exchanges, including Japan’s Coincheck and South Korea’s Coinrail. The Wall Street Journal reported that nearly one in five initial coin offerings (ICOs) showed potential signs of fraud. And questions surfaced about the reliability of Tether, a so-called “stablecoin” meant to be backed one-to-one by US dollars.

Regulators also stepped up scrutiny, and no crypto ETF made it to market despite an aggressive push. At the same time, the US government took an active role in the crypto space throughout 2018. For example, the SEC initiated a broad inquiry into the structure of sales and pre-sales of digital tokens beginning in February. Months later, the Commodity Futures Trading Commission demanded more transparency from BTC exchanges, while contributing to a criminal probe into price manipulation among crypto traders. All the while, the SEC turned down multiple attempts to create a BTC exchange-traded fund amid ongoing concerns over custody and surveillance of the underlying asset.

But this biggest disappointment for crypto enthusiasts is that involvement of traditional institutional investors remained limited in 2018 despite much hype and promise. While BTC futures gained some early traction post their launch on US exchanges in December 2017, open interest and trading volumes have faded since.

In addition, crypto funds have been under substantial pressure (with several shutting), given the sell-off while bitcoin mining profitability and hash rates have collapsed, as many bitcoin miners have gone out of business.

That said, some major banks - including Goldman - announced this year that they are looking at establishing trading desks with a focus on crypto assets.

Despite the crypto carnage of 2018, blockchain technology made some (quieter) gains. While the buzz surrounding blockchain technology seemed to fade in step with the crypto sell-off, a number of companies continued to introduce initial blockchain prototypes. And several banks—especially those in Asia and Latin America—expressed interest in using Ripple’s technology. One notable announcement was the Australian Securities Exchange’s decision to establish a blockchain-based platform to facilitate the clearing and settlement of cash equities, among other functions. The company has since delayed implementation until the first half of 2021, though it still intends to move forward with the project.

Meanwhile, talk of central bank digital currencies continued over the course of 2018, with institutions such as the Bank for International Settlements and the International Monetary Fund dedicating increasing attention to the potential role of central bank digital currencies (CBDCs) in monetary policy, market structure, and payment systems.

* * *

Yet while the bitcoin bubble may have burst, it won't be the first time, and it certainly won't be the first time bitcoin was left for dead (see the charts below) comparing the 2013-2014 and 2017-2018 bubbles.

So what can fans, fanatics, critics, cryptotraders and the general public look for in 2019 (and beyond) according to Goldman Sachs?

  • Continued efforts to expand institutional involvment. Nasdaq may list BTC futures contracts sometime next year, and regulators will also consider new ETF applications, with at least one SEC review pending for early 2019.
  • Further regulatory scrutiny. The SEC has has begun to crack down on unregistered ICOs in what appears to be a broader effort to regulate cryptocurrecies like traditional securities.
  • Broader adoption of blockchain technology. Although blockchain technology will continue to evolve, it has the potential to have a major impact across industries (e.g., peer-to-peer transactions and the clearing/settlement of securities). That said, Goldman expects limited adoption of early-stage blockchain prototypes in the next one to three years. However, broader acceptance is still likely to take a decade or more.

Finally, here is an annotated history of bitcoin prices during the first and second bitcoin bubble. We eagerly look forward to the third, and most violent one.

Published:12/25/2018 3:01:34 PM
[Entertainment] Mike "The Situation" Sorrentino Celebrates Last Christmas Before Prison Sentence Mike Sorrentino, Lauren SorrentinoMike "The Situation" Sorrentino is celebrating his last Christmas at home before beginning prison sentence in a few weeks. The Situation and his wife Lauren Sorrentino looked...
Published:12/25/2018 1:30:53 PM
[Markets] A Bezos Christmas

Forget Dickens, behold the future Bezosian Christmas... "how can someone who gives you whatever you want be a bad guy?"

"But it's Christmas... Christmas... and we have no presents, no decorations, and no stores..."

Absolutely definitely NSFW!!

Published:12/25/2018 1:30:53 PM
[Markets] How A World Order Ends (And What Comes In Its Wake)

Authored by Richard Haass via Foreign Affairs,

A stable world order is a rare thing. When one does arise, it tends to come after a great convulsion that creates both the conditions and the desire for something new. It requires a stable distribution of power and broad acceptance of the rules that govern the conduct of international relations. It also needs skillful statecraft, since an order is made, not born. And no matter how ripe the starting conditions or strong the initial desire, maintaining it demands creative diplomacy, functioning institutions, and effective action to adjust it when circumstances change and buttress it when challenges come.

Eventually, inevitably, even the best-managed order comes to an end. The balance of power underpinning it becomes imbalanced. The institutions supporting it fail to adapt to new conditions. Some countries fall, and others rise, the result of changing capacities, faltering wills, and growing ambitions. Those responsible for upholding the order make mistakes both in what they choose to do and in what they choose not to do.

But if the end of every order is inevitable, the timing and the manner of its ending are not. Nor is what comes in its wake. Orders tend to expire in a prolonged deterioration rather than a sudden collapse. And just as maintaining the order depends on effective statecraft and effective action, good policy and proactive diplomacy can help determine how that deterioration unfolds and what it brings. Yet for that to happen, something else must come first: recognition that the old order is never coming back and that efforts to resurrect it will be in vain. As with any ending, acceptance must come before one can move on. 

In the search for parallels to today’s world, scholars and practitioners have looked as far afield as ancient Greece, where the rise of a new power resulted in war between Athens and Sparta, and the period after World War I, when an isolationist United States and much of Europe sat on their hands as Germany and Japan ignored agreements and invaded their neighbors. But the more illuminating parallel to the present is the Concert of Europe in the nineteenth century, the most important and successful effort to build and sustain world order until our own time. From 1815 until the outbreak of World War I a century later, the order established at the Congress of Vienna defined many international relationships and set (even if it often failed to enforce) basic rules for international conduct. It provides a model of how to collectively manage security in a multipolar world.

That order’s demise and what followed offer instructive lessons for today - and an urgent warning. Just because an order is in irreversible decline does not mean that chaos or calamity is inevitable. But if the deterioration is managed poorly, catastrophe could well follow.


The global order of the second half of the twentieth century and the first part of the twenty-first grew out of the wreckage of two world wars. The nineteenth-century order followed an earlier international convulsion: the Napoleonic Wars, which, after the French Revolution and the rise of Napoleon Bonaparte, ravaged Europe for more than a decade. After defeating Napoleon and his armies, the victorious allies—Austria, Prussia, Russia, and the United Kingdom, the great powers of their day—came together in Vienna in 1814 and 1815. At the Congress of Vienna, they set out to ensure that France’s military never again threatened their states and that revolutionary movements never again threatened their monarchies. The victorious powers also made the wise choice to integrate a defeated France, a course very different from the one taken with Germany following World War I and somewhat different from the one chosen with Russia in the wake of the Cold War.

The congress yielded a system known as the Concert of Europe. Although centered in Europe, it constituted the international order of its day given the dominant position of Europe and Europeans in the world. There was a set of shared understandings about relations between states, above all an agreement to rule out invasion of another country or involvement in the internal affairs of another without its permission. A rough military balance dissuaded any state tempted to overthrow the order from trying in the first place (and prevented any state that did try from succeeding). Foreign ministers met (at what came to be called “congresses”) whenever a major issue arose. The concert was conservative in every sense of the word. The Treaty of Vienna had made numerous territorial adjustments and then locked Europe’s borders into place, allowing changes only if all signatories agreed. It also did what it could to back monarchies and encourage others to come to their aid (as France did in Spain in 1823) when they were threatened by popular revolt.

An engraving of the Congress of Vienna, 1814.

The concert worked not because there was complete agreement among the great powers on every point but because each state had its own reasons for supporting the overall system. Austria was most concerned with resisting the forces of liberalism, which threatened the ruling monarchy. The United Kingdom was focused on staving off a renewed challenge from France while also guarding against a potential threat from Russia (which meant not weakening France so much that it couldn’t help offset the threat from Russia). But there was enough overlap in interests and consensus on first-order questions that the concert prevented war between the major powers of the day.

The concert technically lasted a century, until the eve of World War I. But it had ceased to play a meaningful role long before then. The revolutionary waves that swept Europe in 1830 and 1848 revealed the limits of what members would do to maintain the existing order within states in the face of public pressure. Then, more consequentially, came the Crimean War. Ostensibly fought over the fate of Christians living within the Ottoman Empire, in actuality it was much more about who would control territory as that empire decayed. The conflict pitted France, the United Kingdom, and the Ottoman Empire against Russia. It lasted two and a half years, from 1853 to 1856. It was a costly war that highlighted the limits of the concert’s ability to prevent great-power war; the great-power comity that had made the concert possible no longer existed. Subsequent wars between Austria and Prussia and Prussia and France demonstrated that major-power conflict had returned to the heart of Europe after a long hiatus. Matters seemed to stabilize for a time after that, but this was an illusion. Beneath the surface, German power was rising and empires were rotting. The combination set the stage for World War I and the end of what had been the concert. 


What lessons can be drawn from this history? As much as anything else, the rise and fall of major powers determines the viability of the prevailing order, since changes in economic strength, political cohesion, and military power shape what states can and are willing to do beyond their borders. Over the second half of the nineteenth century and the start of the twentieth, a powerful, unified Germany and a modern Japan rose, the Ottoman Empire and tsarist Russia declined, and France and the United Kingdom grew stronger but not strong enough. Those changes upended the balance of power that had been the concert’s foundation; Germany, in particular, came to view the status quo as inconsistent with its interests.

Changes in the technological and political context also affected that underlying balance. Under the concert, popular demands for democratic participation and surges of nationalism threatened the status quo within countries, while new forms of transportation, communication, and armaments transformed politics, economics, and warfare. The conditions that helped give rise to the concert were gradually undone.

Yet it would be overly deterministic to attribute history to underlying conditions alone. Statecraft still matters. That the concert came into existence and lasted as long as it did underscores that people make a difference. The diplomats who crafted it—Metternich of Austria, Talleyrand of France, Castlereagh of the United Kingdom—were exceptional. The fact that the concert preserved peace despite the gap between two relatively liberal countries, France and the United Kingdom, and their more conservative partners shows that countries with different political systems and preferences can work together to maintain international order. Little that turns out to be good or bad in history is inevitable. The Crimean War might well have been avoided if more capable and careful leaders had been on the scene. It is far from clear that Russian actions warranted a military response by France and the United Kingdom of the nature and on the scale that took place. That the countries did what they did also underscores the power and dangers of nationalism. World War I broke out in no small part because the successors to German Chancellor Otto von Bismarck were unable to discipline the power of the modern German state he did so much to bring about.

Two other lessons stand out. First, it is not just core issues that can cause an order to deteriorate. The concert’s great-power comity ended not because of disagreements over the social and political order within Europe but because of competition on the periphery. And second, because orders tend to end with a whimper rather than a bang, the process of deterioration is often not evident to decision-makers until it has advanced considerably. By the outbreak of World War I, when it became obvious that the Concert of Europe no longer held, it was far too late to save it—or even to manage its dissolution.


The global order built in the aftermath of World War II consisted of two parallel orders for most of its history.

One grew out of the Cold War between the United States and the Soviet Union. At its core was a rough balance of military strength in Europe and Asia, backed up by nuclear deterrence. The two sides showed a degree of restraint in their rivalry. “Rollback”—Cold War parlance for what today is called “regime change”—was rejected as both infeasible and reckless. Both sides followed informal rules of the road that included a healthy respect for each other’s backyards and allies. Ultimately, they reached an understanding over the political order within Europe, the principal arena of Cold War competition, and in 1975 codified that mutual understanding in the Helsinki Accords. Even in a divided world, the two power centers agreed on how the competition would be waged; theirs was an order based on means rather than ends. That there were only two power centers made reaching such an agreement easier. 

The other post–World War II order was the liberal order that operated alongside the Cold War order. Democracies were the main participants in this effort, which used aid and trade to strengthen ties and fostered respect for the rule of law both within and between countries. The economic dimension of this order was designed to bring about a world (or, more accurately, the non-communist half of it) defined by trade, development, and well-functioning monetary operations. Free trade would be an engine of economic growth and bind countries together so that war would be deemed too costly to wage; the dollar was accepted as the de facto global currency.

The diplomatic dimension of the order gave prominence to the UN. The idea was that a standing global forum could prevent or resolve international disputes. The UN Security Council, with five great-power permanent members and additional seats for a rotating membership, would orchestrate international relations. Yet the order depended just as much on the willingness of the noncommunist world (and U.S. allies in particular) to accept American primacy. As it turns out, they were prepared to do this, as the United States was more often than not viewed as a relatively benign hegemon, one admired as much for what it was at home as for what it did abroad. 

Both of these orders served the interests of the United States. The core peace was maintained in both Europe and Asia at a price that a growing U.S. economy could easily afford. Increased international trade and opportunities for investment contributed to U.S. economic growth. Over time, more countries joined the ranks of the democracies. Neither order reflected a perfect consensus; rather, each offered enough agreement so that it was not directly challenged. Where U.S. foreign policy got into trouble—such as in Vietnam and Iraq—it was not because of alliance commitments or considerations of order but because of ill-advised decisions to prosecute costly wars of choice. 


Today, both orders have deteriorated. Although the Cold War itself ended long ago, the order it created came apart in a more piecemeal fashion—in part because Western efforts to integrate Russia into the liberal world order achieved little. One sign of the Cold War order’s deterioration was Saddam Hussein’s 1990 invasion of Kuwait, something Moscow likely would have prevented in previous years on the grounds that it was too risky. Although nuclear deterrence still holds, some of the arms control agreements buttressing it have been broken, and others are fraying. 

Although Russia has avoided any direct military challenge to NATO, it has nonetheless shown a growing willingness to disrupt the status quo: through its use of force in Georgia in 2008 and Ukraine since 2014, its often indiscriminate military intervention in Syria, and its aggressive use of cyberwarfare to attempt to affect political outcomes in the United States and Europe. All of these represent a rejection of the principal constraints associated with the old order. From a Russian perspective, the same might be said of NATO enlargement, an initiative clearly at odds with Winston Churchill’s dictum “In victory, magnanimity.” Russia also judged the 2003 Iraq war and the 2011 NATO military intervention in Libya, which was undertaken in the name of humanitarianism but quickly evolved into regime change, as acts of bad faith and illegality inconsistent with notions of world order as it understood them. 

The liberal order is exhibiting its own signs of deterioration. Authoritarianism is on the rise not just in the obvious places, such as China and Russia, but also in the Philippines, Turkey, and eastern Europe. Global trade has grown, but recent rounds of trade talks have ended without agreement, and the World Trade Organization (WTO) has proved unable to deal with today’s most pressing challenges, including nontariff barriers and the theft of intellectual property. Resentment over the United States’ exploitation of the dollar to impose sanctions is growing, as is concern over the country’s accumulation of debt. 

The UN Security Council is of little relevance to most of the world’s conflicts, and international arrangements have failed more broadly to contend with the challenges associated with globalization. The composition of the Security Council bears less and less resemblance to the real distribution of power. The world has put itself on the record as against genocide and has asserted a right to intervene when governments fail to live up to the “responsibility to protect” their citizens, but the talk has not translated into action. The Nuclear Nonproliferation Treaty allows only five states to have nuclear weapons, but there are now nine that do (and many others that could follow suit if they chose to). The EU, by far the most significant regional arrangement, is struggling with Brexit and disputes over migration and sovereignty. And around the world, countries are increasingly resisting U.S. primacy.

Russian soldiers in military armored personnel carriers on a road near Sevastopol, Crimea, March 2014.


Why is all this happening? It is instructive to look back to the gradual demise of the Concert of Europe. Today’s world order has struggled to cope with power shifts: China’s rise, the appearance of several medium powers (Iran and North Korea, in particular) that reject important aspects of the order, and the emergence of nonstate actors (from drug cartels to terrorist networks) that can pose a serious threat to order within and between states. 

The technological and political context has changed in important ways, too. Globalization has had destabilizing effects, ranging from climate change to the spread of technology into far more hands than ever before, including a range of groups and people intent on disrupting the order. Nationalism and populism have surged—the result of greater inequality within countries, the dislocation associated with the 2008 financial crisis, job losses caused by trade and technology, increased flows of migrants and refugees, and the power of social media to spread hate. 

Meanwhile, effective statecraft is conspicuously lacking. Institutions have failed to adapt. No one today would design a UN Security Council that looked like the current one; yet real reform is impossible, since those who would lose influence block any changes. Efforts to build effective frameworks to deal with the challenges of globalization, including climate change and cyberattacks, have come up short. Mistakes within the EU—namely, the decisions to establish a common currency without creating a common fiscal policy or a banking union and to permit nearly unlimited immigration to Germany—have created a powerful backlash against existing governments, open borders, and the EU itself.

The United States, for its part, has committed costly overreach in trying to remake Afghanistan, invading Iraq, and pursuing regime change in Libya. But it has also taken a step back from maintaining global order and in certain cases has been guilty of costly underreach. In most instances, U.S. reluctance to act has come not over core issues but over peripheral ones that leaders wrote off as not worth the costs involved, such as the strife in Syria, where the United States failed to respond meaningfully when Syria first used chemical weapons or to do more to help anti-regime groups. This reluctance has increased others’ propensity to disregard U.S. concerns and act independently. The Saudi-led military intervention in Yemen is a case in point. Russian actions in Syria and Ukraine should also be seen in this light; it is interesting that Crimea marked the effective end of the Concert of Europe and signaled a dramatic setback in the current order. Doubts about U.S. reliability have multiplied under the Trump administration, thanks to its withdrawal from numerous international pacts and its conditional approach to once inviolable U.S. alliance commitments in Europe and Asia. 


Given these changes, resurrecting the old order will be impossible. It would also be insufficient, thanks to the emergence of new challenges. Once this is acknowledged, the long deterioration of the Concert of Europe should serve as a lesson and a warning. 

For the United States to heed that warning would mean strengthening certain aspects of the old order and supplementing them with measures that account for changing power dynamics and new global problems. The United States would have to shore up arms control and nonproliferation agreements; strengthen its alliances in Europe and Asia; bolster weak states that cannot contend with terrorists, cartels, and gangs; and counter authoritarian powers’ interference in the democratic process. Yet it should not give up trying to integrate China and Russia into regional and global aspects of the order. Such efforts will necessarily involve a mix of compromise, incentives, and pushback. The judgment that attempts to integrate China and Russia have mostly failed should not be grounds for rejecting future efforts, as the course of the twenty-first century will in no small part reflect how those efforts fare.

The United States also needs to reach out to others to address problems of globalization, especially climate change, trade, and cyber-operations. These will require not resurrecting the old order but building a new one. Efforts to limit, and adapt to, climate change need to be more ambitious. The WTO must be amended to address the sorts of issues raised by China’s appropriation of technology, provision of subsidies to domestic firms, and use of nontariff barriers to trade. Rules of the road are needed to regulate cyberspace. Together, this is tantamount to a call for a modern-day concert. Such a call is ambitious but necessary.

The United States must show restraint and recapture a degree of respect in order to regain its reputation as a benign actor. This will require some sharp departures from the way U.S. foreign policy has been practiced in recent years: to start, no longer carelessly invading other countries and no longer weaponizing U.S. economic policy through the overuse of sanctions and tariffs. But more than anything else, the current reflexive opposition to multilateralism needs to be rethought. It is one thing for a world order to unravel slowly; it is quite another for the country that had a large hand in building it to take the lead in dismantling it. 

All of this also requires that the United States get its own house in order - reducing government debt, rebuilding infrastructure, improving public education, investing more in the social safety net, adopting a smart immigration system that allows talented foreigners to come and stay, tackling political dysfunction by making it less difficult to vote, and undoing gerrymandering. The United States cannot effectively promote order abroad if it is divided at home, distracted by domestic problems, and lacking in resources.

The major alternatives to a modernized world order supported by the United States appear unlikely, unappealing, or both. A Chinese-led order, for example, would be an illiberal one, characterized by authoritarian domestic political systems and statist economies that place a premium on maintaining domestic stability. There would be a return to spheres of influence, with China attempting to dominate its region, likely resulting in clashes with other regional powers, such as India, Japan, and Vietnam, which would probably build up their conventional or even nuclear forces.

A new democratic, rules-based order fashioned and led by medium powers in Europe and Asia, as well as Canada, however attractive a concept, would simply lack the military capacity and domestic political will to get very far. A more likely alternative is a world with little order—a world of deeper disarray. Protectionism, nationalism, and populism would gain, and democracy would lose. Conflict within and across borders would become more common, and rivalry between great powers would increase. Cooperation on global challenges would be all but precluded. If this picture sounds familiar, that is because it increasingly corresponds to the world of today. 

The deterioration of a world order can set in motion trends that spell catastrophe. World War I broke out some 60 years after the Concert of Europe had for all intents and purposes broken down in Crimea. What we are seeing today resembles the mid-nineteenth century in important ways: the post–World War II, post–Cold War order cannot be restored, but the world is not yet on the edge of a systemic crisis. Now is the time to make sure one never materializes, be it from a breakdown in U.S.-Chinese relations, a clash with Russia, a conflagration in the Middle East, or the cumulative effects of climate change. The good news is that it is far from inevitable that the world will eventually arrive at a catastrophe; the bad news is that it is far from certain that it will not.

Published:12/25/2018 12:28:25 PM
[Markets] Turkey Says US Agreed To Vacate Syrian Kurdish Enclave As Ground Attack Imminent

On Christmas Eve the White House announced in a statement that President Trump is open to a "potential meeting in the future" with Turkish President Recep Tayyip Erdogan. The statement noted Turkey's president had formally invited Trump to meet in 2019, though nothing specific or definite has been planned. 

This comes after it was revealed that in a Dec. 14 phone call between the two leaders Trump said the US was "done" with Syria. Quickly on the heels of last week's announced decision for a "full" and "immediate" pullout of the some 2000+ American military personnel training and advising Kurdish-Arab SDF forces in north-east Syria. Trump's senior aides noted the decision was made after the phone call, and curiously the U.S. State Department approved the sale of $3.5 billion in patriots missiles the day after.

According to a senior administration official who spoke to CNN, Trump told Erdogan, "OK, it's all yours. We are done," in reference to Syria. The president sought assurances from Erdogan that Turkey would finish off remnant ISIS cells in eastern Syria, per the CNN report:

A senior White House official said Erdogan gave Trump his "word" that Turkey would finish off ISIS.

"In the call on Friday, Erdogan said to the President, 'In fact, as your friend, I give you my word in this,'" the senior White House official said.

While giving a speech last Friday Erdogan revealed some of the details of the call, saying, "During a conversation I had with Mr. Trump  he said 'ISIS, can you clear ISIS from this area?'" Erdogan recalled further: "We did it before, and we can again as long as we have logistic support from you... And so they began pulling out." Erdogan added: "Within the framework of the phone call we had with Mr. Trump, we have started preparing plans for operations to clear the ISIS elements still within Syria."

Trump, for his part, subsequently confirmed in a weekend tweet: "I just had a long and productive call with President Erdogan of Turkey. We discussed ISIS, our mutual involvement in Syria, & the slow & highly coordinated pullout of U.S. troops from the area. After many years they are coming home. We also discussed heavily expanded Trade."

Meanwhile a major Turkish Army and Turkish-backed rebel assault on the key Syrian Kurdish stronghold of Manbij is imminent. Turkey has been reported over the past days to be mustering large forces, including hundreds of vehicles and troops surrounding the northwestern Syrian town, around Manbij. 

Turkey has long demanded US advisers to withdraw and to clear the town of armed Syrian Kurdish groups, specifically the YPG, which forms the core of the US-backed SDF but which Ankara sees as an extension of the outlawed terror group, the PKK.

Bloomberg described the military build-up, filmed by Turkish state media, as follows:

The convoy of around 200 vehicles, including howitzers, armored personnel carriers and artillery, advanced to reinforce the military’s presence in areas close to Manbij, TRT said on Sunday. They were joined by forces of the Free Syrian Army, which has backed Turkish offensives against Syrian Kurdish militants, state-run Anadolu Agency said Monday.

However, as a potential bloodbath is set to ensue, on Tuesday morning Turkey's foreign minister announced the United States has agreed to complete to a "roadmap" for the removal of all Kurdish militia fighters from the Northern Syrian town before American forces clear out.

Though the US side has yet to confirm Turkey's latest claims, it appears the handover of Manbij to Turkey has begun following prior threats from Erdogan to "cleanse" the region of all Kurdish resistance. 

Published:12/25/2018 11:58:26 AM
[Markets] Taibbi: We Know How Trump's War Game Ends

Authored by Matt Taibbi via,

Nothing unites our political class like the threat of ending our never-ending war ...

So we’re withdrawing troops from the Middle East.


What’s the War on Terror death count by now, a half-million? How much have we spent, $5 trillion? Five-and-a-half?

For that cost, we’ve destabilized the region to the point of abject chaos, inspired millions of Muslims to hate us, and torn up the Geneva Convention and half the Constitution in pursuit of policies like torture, kidnapping, assassination-by-robot and warrantless detention.

It will be difficult for each of us to even begin to part with our share of honor in those achievements. This must be why all those talking heads on TV are going crazy.

Unless Donald Trump decides to reverse his decision to begin withdrawals from Syria and Afghanistan, cable news for the next few weeks is going to be one long Scanners marathon of exploding heads.

“Today’s decision would cheer Moscow, ISIS, and Iran!” yelped Nicole Wallace, former George W. Bush communications director.

“Maybe Trump will bring Republicans and Democrats together,” said Bill Kristol, on MSNBC, that “liberal” channel that somehow seems to be populated round the clock by ex-neocons and Pentagon dropouts.

Kristol, who has rarely ever been in the ballpark of right about anything — he once told us Iraq was going to be a “two month war” — might actually be correct.

Trump’s decisions on Syria and Afghanistan will lay bare the real distinctions in American politics. Political power in this country is not divided between right and left, and not even between rich and poor.

The real line is between a war party, and everyone else.

This is why Kristol is probably right. The Democrats’ plan until now was probably to impeach Trump in the House using at minimum some material from the Michael Cohen case involving campaign-finance violations.

That plan never had a chance to succeed in the Senate, but now, who knows? Troop withdrawals may push a collection of hawkish Republicans like Lindsey Graham, Marco Rubio, Ben Sasse and maybe even Mitch McConnell into another camp.

The departure of Defense Secretary Jim Mattis — a standard-issue Pentagon toady who’s never met an unending failure of a military engagement he didn’t like and whose resignation letter is now being celebrated as inspirational literature on the order of the Gettysburg Address or a lost epic by Auden or Eliot — sounded an emergency bell for all these clowns. The letter by Mattis, Rubio said:

“Makes it abundantly clear we are headed towards a series of grave policy errors which will endanger our nation, damage our alliances & empower our adversaries.”

Talk like this is designed to give political cover to Republican fence-sitters on Trump. That wry smile on Kristol’s face is, I’d guess, connected to the knowledge that Trump put the Senate in play by even threatening to pull the plug on our Middle Eastern misadventures.

You’ll hear all sorts of arguments today about why the withdrawals are bad.

You’ll hear Trump has no plan, which is true. He never does, at least not on policy.

But we don’t exactly have a plan for staying in the Middle East, either, beyond installing a permanent garrison in a dozen countries, spending assloads of money and making ourselves permanently despised in the region as civilian deaths pile up through drone-bombings and other “surgical” actions.

You’ll hear we’re abandoning allies and inviting massacres by the likes of Turkish dictator Recep Tayyip Erdogan. If there was any evidence that our presence there would do anything but screw up the situation even more, I might consider that a real argument. At any rate, there are other solutions beyond committing American lives. We could take in more refugees, kick Turkey out of NATO, impose sanctions, etc.

As to the argument that we’re abandoning Syria to Russians — anyone who is interested in reducing Russian power should be cheering. If there’s any country in the world that equals us in its ability to botch an occupation and get run out on a bloody rail after squandering piles of treasure, it’s Russia. They may even be better at it than us. We can ask the Afghans about that on our way out of there.

The Afghan conflict became the longest military engagement in American history eight years ago. Despite myths to the contrary, Barack Obama did not enter office gung-ho to leave Afghanistan. He felt he needed to win there first, which, as anyone who’s read The Great Game knows, proved impossible. So we ended up staying throughout his presidency.

We were going to continue to stay there, and in other places, forever, because our occupations do not work, as everyone outside of Washington seems to understand.

TV talking heads will be unanimous on this subject, but the population, not so much. What polls we have suggest voters want out of the region in increasing numbers.

A Morning Consult/Politico poll from last year showed a plurality favored a troop decrease in Afghanistan, while only 5 percent wanted increases. Polls consistently show the public thinks our presence in Afghanistan has been a failure.

There’s less about how the public feels about Syria, but even there, the data doesn’t show overwhelming desire to put boots on the ground.

When Trump first ordered airstrikes in Syria over Assad’s use of chemical weapons, 70 percent favored sanctions according to Politicowhile 39 percent favored sending troops. A CBS poll around that time found 45 percent wanted either no involvement period, or airstrikes and no ground troops, versus 18 percent who wanted full military involvement.

Trump is a madman, a far-right extremist and an embarrassment, but that’s not why most people in Washington hate him. It’s his foreign-policy attitudes, particularly toward NATO, that have always most offended DC burghers.

You could see the Beltway beginning to lose its mind back in the Republican primary race, when then-candidate Trump belittled America’s commitment to Middle Eastern oil states.

“Every time there’s a little ruckus, we send those ships and those planes,” he said, early in his campaign. “We get nothing. Why? They’re making a billion a day. We get nothing.”

As he got closer to the nomination, he went after neoconservative theology more explicitly.

“I don’t think we should be nation-building anymore,” he said, in March of 2016. He went on: “I watched as we built schools in Iraq and they’re blown up. We build another one, we get blown up.”

Trump was wrong about a thousand other things, but this was true. I had done a story about how military contractors spent $72 million on what was supposed to be an Iraqi police academy and delivered a pile of rubble so unusable, pedestrians made it into a toilet.

The Special Inspector General for Iraqi Reconstruction noted, “We witnessed a light fixture so full of diluted urine and feces that it would not operate.”

SIGIR found we spent over $60 billion on Iraqi reconstruction and did not significantly improvelife for Iraqis. The parallel body covering Afghanistan, the Special Inspector General for Afghan Reconstruction, concluded last year that at least $15.5 billion had been wasted in that country between 2008 and 2017, and this was likely only a “fraction” of financial leakage.

Trump, after sealing the nomination, upped the ante. In the summer of 2016 he said he wasn’t sure he’d send troops to defend NATO members that didn’t pay their bills. NATO members are supposed to kick in 2 percent of GDP for their own defense. At the time, only four NATO members(Estonia, Poland, the U.K. and the U.S.) were in compliance.

Politicians went insane. How dare he ask countries to pay for their own defense! Republican House member Adam Kinzinger, a popular guest in the last 24 hours, said in July 2016 that Trump’s comments were “utterly disastrous.”

“There’s no precedent,” said Thomas Wright, a “Europe scholar” from the Brookings Institute.

When the news came after Trump’s election that he’d only read his intelligence briefings once a week instead of every day as previous presidents had dutifully done, that was it. The gloves were off at that point.

“The open disdain Trump has shown for the agencies is unprecedented,” said Patrick Skinner, a former CIA official for both George W. Bush and Obama.

All that followed, through today, has to be understood through this prism.

Trump dumped on basically every segment of the political establishment en route to Washington, running on a classic authoritarian strategy — bash the elites, pose as a populist.

However fake he was, there were portions of the political establishment that deserved abuse, the Pentagon most of all.

The Department of Defense has been a money pit for decades. It has trillions in expenditures it can’t account for, refused an audit for nearly 30 years and then failed this year (as in failed completely, zero-point-zero, not producing any coherent numbers) when one was finally funded.

We have brave and able soldiers, but their leaders are utter tools who’ve left a legacy of massacres and botched interventions around the world.

NATO? That’s an organization whose mission stopped making sense the moment the Soviet Union collapsed. We should long ago have repurposed our defense plan to focus on terrorism, cyber-crime and cyber-attacks, commercial espionage, financial security, and other threats.

Instead, we continued after the Soviet collapse to maintain a global military alliance fattened with increasingly useless carriers and fighter jets, designed to fight archaic forms of war.

NATO persisted mainly as a PR mechanism for a) justifying continued obscene defense spending levels and b) giving a patina of internationalism to America’s essentially unilateral military adventures.

We’d go into a place like Afghanistan with no real plan for leaving, and a few member nations like Estonia and France and Turkey would send troops to get shot at with us. But it was always basically Team America: World Police with supporting actors. No wonder so few of the member countries paid their dues.

Incidentally, this isn’t exactly a secret. Long before Trump, this is what Barney Frank was saying in 2010: “I think the time has come to reexamine NATO. NATO has become an excuse for other people to get America to do things.”

This has all been a giant, bloody, expensive farce, and it’s long since time we ended it.

We’ll see a lot of hand-wringing today from people who called themselves anti-war in 2002 and 2003, but now pray that the “adults in the room” keep “boots on the ground” to preserve “credibility.”

Part of this is because it’s Trump, but a bigger part is that we’ve successfully brainwashed big chunks of the population into thinking it’s normal for a country to exist in a state of permanent war, fighting in seven countries at once, spending half of all discretionary funding on defense.

It’s not. It’s insane. And we’ll never be a healthy society, or truly respected abroad, until we stop accepting it as normal.

Incidentally, I doubt Trump really follows through on this withdrawal plan. But until he changes (what passes for) his mind, watch what happens in Washington.

We’re about to have a very graphic demonstration of the near-total uniformity of the political class when it comes to the military and its role. The war party is ready for a coming-out party.

Published:12/25/2018 10:58:32 AM
[Entertainment] Robin Thicke Engaged to Girlfriend April Love Geary Robin Thicke, April Love GearyThere aren't any blurred lines here! Robin Thicke and April Love Geary are now engaged. The "Lost Without U" singer popped the question to his girlfriend on Christmas Eve as...
Published:12/25/2018 10:58:32 AM
[Markets] The Twelve Rules Of Christmas (A Constitutional Q&A)

Authored by John Whitehead via The Rutherford Institute,

The Christmas season is unquestionably the most festive time of the year for Americans, celebrated across the nation by persons of all walks of life and political beliefs.  Even those without strong religious beliefs join in the festivities of a season dedicated to sharing, helping the less fortunate and striving for peace in the world.

However, the goodwill of the Christmas season has been squelched in many public schools, where uninformed administrators are turned into Grinches by misguided  fears  that the law requires anything religious be banned from public schools. Over the years, The Rutherford Institute has been contacted by parents and teachers alike concerned about schools changing their Christmas concerts to “winter holiday programs” and renaming Christmas “winter festival” or cancelling holiday celebrations altogether to avoid offending those who do not celebrate the various holidays.

Examples of the purging of Christmas from our schools abound:

  • A Minnesota charter school banned the display of a poster prepared to promote the school’s yearbook as a holiday gift because the poster included the word “Christmas”;

  • Traditional Christmas songs, such as “Joy to the World” and “Silent Night” have been banned from holiday concerts by a New Jersey school district.  The district justifies the ban as needed to avoid violating the “separation of church and state,” even though it is clear that religious music can be performed in public schools;

  • A teacher in Texas who decorated her door with a scene from “A Charlie Brown Christmas”, including a scrawny tree and Linus, was forced to take it down.  She was told by her principal that some students might be offended or feel uncomfortable.

Students asked to send seasonal cards to military troops have been told to make them “holiday cards” and instructed not to use the words “Merry Christmas” on their cards. Similarly, Christmas trees, wreaths, candy canes and even the colors red and green have been banned as part of the effort to avoid any reference to Christmas, Christ or God.

Hoping to clear up the legal misunderstanding over the do’s and don’ts of celebrating Christmas, the following Constitutional Q&A on the “Twelve Rules of Christmas” provides basic guidelines for lawfully celebrating Christmas in schools, workplaces and elsewhere.

Q:  May public school students speak about Christmas at school?

A:  Public school students’ written or spoken personal expressions concerning the religious significance of Christmas (e.g., T-shirts with the slogan, “Jesus Is the Reason for the Season”) may not be censored by school officials absent evidence that the speech would cause a substantial disruption of the orderly operation of the school.

Q:  Are public school teachers forbidden from celebrating the holiday at work?

A:  So long as teachers are generally permitted to wear clothing or jewelry or have personal items expressing their views about the holidays, teachers may not be prohibited from similarly expressing their views by wearing Christmas-related clothing or jewelry or carrying Christmas-related personal items.

Q:  May students be taught about Christmas?

A:  Public schools may teach students about the Christmas holiday, including its religious significance, so long as it is taught objectively for secular purposes such as its historical or cultural importance, and not for the purpose of promoting Christianity.

Q:  Are teachers allowed to send holiday cards or gifts to their students or their students’ families?

A:  Public school teachers may send Christmas cards and gifts to the families of their students so long as they do so on their own time, outside of school hours.

Q:  Is Christmas music prohibited in schools?

A:  Public schools may include Christmas music, including those with religious themes, in their choral programs if the songs are included for a secular purpose such as their musical quality or cultural value or if the songs are part of an overall performance including other holiday songs relating to Chanukah, Kwanzaa, or other similar holidays.

Q:  What if a student does not believe in or celebrate Christmas?

A:  Public schools may not require students to sing Christmas songs whose messages conflict with the students’ own religious or nonreligious beliefs.

Q:  May students give out Christmas cards at school?

A:  Public school students may not be prohibited from distributing literature to fellow students concerning the Christmas holiday or invitations to church Christmas events on the same terms that they would be allowed to distribute other literature that is not related to schoolwork.

Q:  Are people allowed to put up Christmas displays in parks?

A:  Private citizens or groups may display crèches or other Christmas symbols in public parks subject to the same reasonable time, place, and manner restrictions that would apply to other similar displays.

Q:  Is a city or town prohibited from sponsoring a holiday display?

A:  Government entities may erect and maintain celebrations of the Christmas holiday, such as Christmas trees and Christmas light displays, and may include crèches in their displays at least so long as the purpose for including the crèche is not to promote its religious content and it is placed in context with other symbols of the Holiday season as part of an effort to celebrate the public Christmas holiday through its traditional symbols.

Q:  Can my employer prohibit me from celebrating Christmas while on the job?

A:  Neither public nor private employers may prevent employees from decorating their offices for Christmas, playing Christmas music, or wearing clothing related to Christmas merely because of their religious content so long as these activities are not used to harass or intimidate other employees.

Q:  Can my employer require me to work on Christmas?

A:  Public or private employees whose sincerely held religious beliefs require that they not work on Christmas must be reasonably accommodated by their employers unless granting the accommodation would impose an undue hardship on the employer.

Q:  If the Constitution requires a “separation of church and state,” why is Christmas a national holiday?

A:  Courts have routinely held that government recognition of Christmas as a public holiday and granting government employees a paid holiday for Christmas does not violate the Establishment Clause of the First Amendment. The government has a valid secular interest in providing a day of rest to citizens and may accommodate the religious beliefs of citizens in doing so.

Published:12/25/2018 9:27:44 AM
[World] Forget dogs and cats. The most pampered pets of the moment might be our backyard chickens The backyard chicken movement is entering a new phase: Owners pampering the birds as pets.
Published:12/25/2018 8:57:10 AM
[Markets] Revisiting 2018 Themes (In Goldman Sachs' Crossword Style)

Via Goldman Sachs,

As we head into year-end, Goldman's Allison Nathan continues the firm's tradition of taking stock of the big themes in a crossword.

On the heels of a 2017 characterized by low volatility, robust growth, and strong performance across risky assets, 2018 has (unfortunately) delivered the reverse. Political, economic and technical factors contributed to some eye-popping spikes in volatility, from the equity sell-offs in Q1 and Q4 to the blowout of Italian sovereign bond spreads in June and the recent moves in oil prices. Episodes like these have raised questions about market liquidity and fragility, and have only intensified the deterioration of risk sentiment going into year-end. Indeed, 2018 is closing on a pessimistic note, with most major asset classes posting negative returns for the year. (For those who missed it, even the optimism over cryptocurrencies has faded, with bitcoin down a whopping 73% year-to-date.)

While far from being the only driver, trade tensions have undoubtedly contributed to market anxiety. President Trump’s trade agenda gained steam throughout the year, with productand commodity-specific actions followed by several rounds of US-China tariffs and the US threat of measures on foreign autos. Despite the current pause in US-China tensions, trade risk remains in the cards next year. We see further escalation as slightly more likely than not before Washington and Beijing reach a long-term deal. And while auto tariffs are not our base case, we expect other measures such as quotas or export restraints in 2019 (but, on a more positive note, we also expect NAFTA’s replacement to become law).

Nowhere has trade uncertainty been more important than China, especially amid further signs of slowing growth. But with targeted stimulus now kicking into gear, we think growth will recover somewhat by mid-2019, taking risky assets in the region (and China-exposed commodities) with it. That said, trade will continue to pose headline risk, particularly for the yuan, which would likely breach 7.0 vs. the US dollar if talks collapse (but should remain below 7.0 while they’re ongoing).

The other major investor concern has been the growth slowdown, which has extended well past China, raising fears around recession risk. Indeed, our global CAI has declined to about 3.5% so far in December from nearly 5% at the start of the year. That, in turn, has driven the ongoing sell-off in equities (leading to a substantial tightening of financial conditions—a growth headwind in and of itself). As a result, markets have reduced their expectations for Fed hikes next year to just half a hike (vs. about two earlier this fall); and, amid the drop in oil prices, the bond bear market that characterized much of 2018 has reversed course, with 10-year Treasury yields down ~45bp from their October peak.

We too have adjusted our Fed view, and now expect a pause in March. However, we maintain that further tightening remains necessary to avoid labor-market overheating. On a probability-weighted basis, we forecast 1.6 net hikes next year, slowing growth to roughly our estimate of potential—1.75%—by the end of the year. But with financial imbalances broadly in check and no obvious catalyst in sight, we believe the risk of a US recession in 2019 remains low (10%).

We also don’t see major risks resulting from US midterm elections, which yielded the expected outcome of a divided Congress. We expect the overall direction of policy to remain intact, with little in the way of change on taxes or infrastructure. But investors should still keep an eye on healthcare, as Democrats will probably pursue legislation on drug pricing and other issues. In addition, concerns about data privacy could prompt new action on tech regulation. Also key to watch: the deadline for raising the debt limit—most likely in August 2019—which could prove disruptive, and perhaps even more so as the federal budget deficit tops $1tn in FY2019.

But as contentious as the US fiscal situation might become, Europe has arguably already won the prize for fiscal concerns. After months of tense negotiations, Italy has reached a deal over its budget with Brussels. But we’d take the news with a grain of salt; until Italy’s government officially scales back key policy promises or confirms spending cuts elsewhere, we remain cautious on the country’s outlook. In the meantime, investors are also watching France’s promises of fiscal easing in response to the populist “yellow vest” movement. Indeed, between President Emmanuel Macron’s weak approval ratings, the possibility of snap elections across the continent, and Angela Merkel’s decision to step down as German Chancellor in 2021, political risk in Europe shows no sign of abating.

On that note, let’s not forget Brexit, where UK politics have left all options—an orderly Brexit, a disorderly Brexit, or no Brexit at all—still on the table. Given the lack of a unifying alternative, our base case remains the first of these; but the weeks leading up to the UK Parliament vote on the deal (now set for mid-January) will prove decisive... stay tuned.

So where does all this leave our asset views heading into 2019? In the near term, growth concerns and market pessimism may well persist. But over the medium term, we believe slower but still solid global growth will drive equity upside across the major indices, higher bond yields in the G10, commodity strength, and US dollar weakness. We also see a narrow path to performance for Emerging Markets (EM) after a difficult year.

That said, we expect higher volatility, growing macro headwinds, and increasing tail risks. We therefore recommend positioning for a potentially bumpy ride: shifting up in quality, utilizing hedges, and keeping an overweight in cash.

*  *  *


4. A major sticking point surrounding Brexit is the Irish ____ (Issue 70).

7. Some market participants argue that increased ____ of trading in US equities has made the markets more fragile (Issue 68).

10. EM assets outperformed in 2004-2006 despite ____ consecutive rate hikes by the Fed (Issue 69).

12. US economic strength has historically coincided with ____ tightening, which makes this year’s loosening so unusual. (Issue 71).

14. Historically, the painful “trio” for Emerging Markets (EM) has been higher US ____, rising oil prices, and a stronger US dollar (Issue 69).

15. The sector that is likely to be most impacted by the Democrats gaining control of the House in the US midterm elections. (Issue 73).

18. During the June sell-off in Italian sovereign bonds, ____ seemed to exacerbate market moves, much like during the “flash crash” in US equities in 2010 (Issue 68).

19. Today, ____ balance sheets look healthier than corporate balance sheets, which is the reverse of what we saw heading into the Global Financial Crisis (Issue 72).

22. Many bond bears cite increased Treasury ____ to fund the US’s growing budget deficit as a reason to expect higher Treasury yields in coming years (Issue 65).

23. Some of President Trump’s actions on trade fall under US trade provisions that conflict with ____ rules (Issue 66).

24. European data privacy regulation that came into force on May 25, 2018, and can levy a fine as high as 4% of a company’s annual turnover (Issue 67).

27. According to Mohamed El-Erian, Chief Economic Advisor at Allianz, the fact that “____” investors outnumber “local” investors means capital outflows from EM will continue (Issue 69).

28. A cryptocurrency platform that allows for the creation of “smart contracts” (Issue 64).

29. A lower threshold for proving ____, the European equivalent of monopoly power, is one reason why Europe has generally been more active on tech regulation than the United States (Issue 67).

30. GS research shows that fiscal expansion in highly indebted countries like Italy does little to boost ____ (Issue 71).


1. Unlike most commodities, bitcoin requires little physical storage. Even a 3½ inch floppy disk can hold almost 30K private ____ (Issue 64).

2. Deliberate financial sector de-risking in China has slowed the flow of credit to the private sector, leading to a rise in ____ (Issue 74).

3. Observers cite the ____ of cryptocurrencies as an impediment to their broader adoption for use as a currency (Issue 64).

5. In the US, ____ has jurisdiction over foreign commerce, but has delegated much of its authority on trade to the president over the years (Issue 66).

6. The abbreviation for a market-making firm that typically posts orders to buy and sell in very quick succession (Issue 68).

8. Labor market ____ could be a trigger of recession (Issue 72).

9. Raising the debt ____ in 2019 could prove as contentious as in 2011 and 2013, when government/Congress was also divided (Issue 73).

11. Competition between the US and China in this sector is very likely to increase (Issue 74).

13. President Trump’s tweets this year turned the spotlight on this company’s postal rates and tax practices (Issue 67).

16. UK political expert Anand Menon has argued that a second ____ would only further complicate the situation around Brexit (Issue 70).

17. Paul Tudor Jones, co-chairman and CIO of Tudor Investment Corp., is not convinced that technological disruption will continue to bring ____ (Issue 65).

20. Policies intended to curb ____ banking contributed to the growth slowdown in China this year (Issue 74).

21. Substantial growth in the ____ debt market has sparked concern from regulators worried about systemic risk (Issue 72).

25. A “no deal” ____ of the UK from the EU might be a possibility if the UK parliament fails to pass the Withdrawal Agreement negotiated between UK PM May and Brussels (Issue 70).

26. Harvard Kennedy School Professor Carmen M. Reinhart argues that high ____ levels have historically been associated with lower economic growth (Issue 71).

Solution below (don't cheat)







We hope you didn't cheat...

Published:12/25/2018 7:27:10 AM
[Markets] China Shows Mnuchin How It's Done As Beijing's Plunge Protection Team Reverses Stock Rout

One day after Steven Mnuchin convened the President's Working Group on Financial Markets, also known as the Plunge Protection Team, only to see a record Christmas Eve drop in US stock markets, China showed the US how market manipulation is done.

With only a handful of Asian markets open on Christmas Day, and with Nikkei 225 plummeting 1000 points as Japan's blue chip index closed a whopping 5% lower and entered a bear market, China's stocks similarly started the day off on the back foot with both the Shanghai Composite and the SSE 50 Index of the country’s largest stocks sliding around 2.5% in early trade. However all that reversed in the afternoon session when the Chinese National Team came in and started buying mostly financial stocks, lifting the country's markets and pushing the Composite back over 2,500, ending with a loss of just 0.9%.

Agricultural Bank of China added 0.9% on Tuesday, erasing a drop of 0.6% thanks to the burst of late day buying. Bank of China rose 0.6 percent, and Bank of Communications rose 0.4%. China Southern Airlines rose 1.9 percent as the best performer on the SSE 50 measure, erasing a slide of 1% in the morning.

Meanwhile, an index of energy stocks was the worst performer among the CSI 300 Index’s 10 industry groups, falling 2.1% as crude fell to the lowest level in a year and a half. China Petroleum & Chemical and PetroChina lost at least 2%. Earlier in the session, Chinese oil futures for March delivery fall by the 7% daily limit from Monday’s settlement price to 351.6 yuan/bbl ($51.12) on Tuesday in Shanghai as the global oil rout leaves no market unscathed.

"The gains by big banks and insurers suggest state buying, and some funds may also be bottom-fishing stocks," said Dai Ming, a fund manager with Hengsheng Asset Management. Kang Chongli, a Beijing-based strategist with Lianxun Securities told Bloomberg that the 2,500 level "is both a policy and technical bottom" for the Shanghai Composite Index. The index closed just above it, at 2,504.82.

Just like the now confirmed Plunge Protection Team, China’s "national team" of state-backed funds often buys shares during turbulent times. Large caps like banks are among the most favored targets, and buying often comes in the afternoon so gains, or at least smaller losses, are locked in for the day.

Tuesday's re-emergence of the Chinese plunge protectors will come as a relief to struggling local investors after Goldman found that, inexplicably, in the third quarter the National Team was a net seller of RMB104 BN in stocks, the biggest quarterly sale by the National Team since the Chinese stock bubble popped in late 2015.

And while Beijing showed Mnuchin how state-sponsored manipulation of the market should work, the latest intervention will offer little comfort to Chinese investors, as the Shanghai Composite is down 24% this year, its worst performance in a decade as the trade war with the U.S. escalated.

Published:12/25/2018 6:57:18 AM
[Markets] Here Are Europe's Most Terrifying Christmas Traditions

Authored by Joshua Gill via The Daily Caller,

  • While Santa Claus is a universally known Christmas figure, other more fiendish characters feature in Christmas traditions throughout Europe.

  • These terrifying characters are largely holdovers from pre-Christian paganism, some of them even once being worshiped as deities.

  • The characters are believed to punish children for misbehavior with death or beatings, cutting an odd figure next to Christ’s offer of mercy and grace.

The Christmas spirit usually banishes fear, but in some countries Christmas brings fear in abundance, trading Santa for ravenous ghouls who feast on children.

The story of the Magi’s visit to Jesus Christ and the historical figure of St. Nicholas gave rise to the tradition of gift giving during the commemoration of Christ’s birth. Holdovers from European paganism, however, introduced traditions of terror and retribution alongside what is otherwise a celebration of the hope of divine mercy and grace for all mankind in Christ.

Here are some of those terrifying Christmas traditions of Europe, sure to frighten children into good behavior as though their lives depended on it.


Germany may well have the largest number of creepy Christmas traditions, and Frau Perchta takes the cake as the most macabre. Perchta, also known as Berchta or Percht, is an ancient Alpine Pagan goddess whose followers would don masks of her likeness and wear them in public processions as her entourage, to ward off evil spirits and ghosts, from the last week in December to January 6. When the Germanic regions were Christianized, Frau Perchta and her processions remained as part of Christmas traditions in Bavaria and Austria — traditions that continue to this day.

Participants dressed as Perchten roam village streets to chase away evil winter spirits in the annual Perchten gathering in Bavaria on November 29, 2014 near Kirchseeon, Germany. Perchten are the mythical entourage of Perchta, a goddess in ancient southern German alpine pagan tradition, and are usually fearsome creatures with tusks and horns and covered in hair. The tradition dates back at least to the 16th century and is also related to traditions of Krampus, Teifel, Klausen and La Befana, all animal-like creatures in the German, Austrian, Italian and Swiss alpine regions whose duties include instilling fear into naughty children. (Photo by Philipp Guelland/Getty Images)

According to legend, Frau Perchta visits children between Christmas and the feast of Epiphany. She rewards good children with a silver coin, but if they had misbehaved she would disembowel them and stuff them with straw where their organs had been.


Iceland is second in the running for the European country with the most threatening Christmas myths, and Grýla is mother to them all. Grýla is a troll who features in Icelandic mythology.  She, like Frau Perchta, remained after the Christianization of Iceland and became connected with Christmas tradition, in part because of her connection with the pagan celebration of Yule. Now the she-troll is said to be able to detect misbehaving children all year long, and that at Christmas time she leaves her home in the mountains to sate her insatiable appetite for the flesh of children.

She searches towns for misbehaving children, kidnaps them, brings them back to her home and boils them alive to make a stew.

Gryla and her husband (Creative Commons)

Songs and epic poems dating as far back as the 13th century speak to the gruesome horror of Grýla.

“Down comes Grýla from the outer fields / With forty tails / A bag on her back, a sword / knife in her hand, / Coming to carve out the stomachs of the children / Who cry for meat during Lent,” reads one poem, according to Smithsonian Magazine.

Brian Pilkington, an illustrator, said that for children in Iceland, the legend isn’t just fun and games.

“Children are truly terrified of Grýla in Iceland,” says Pilkington, according to Smithsonian Magazine. “I’ve visited children’s playschools to demonstrate drawing skills and if I draw Grýla then two or three terrified children have to leave the room because it’s too strong for them. This is living folklore.”

Grýla was no laughing matter for early Icelandic people either.

Terry Gunnell, the head of the University of Iceland’s Folkloristics Department, said that before Grýla was associated with Christmas, she was “associated with a threat that lives in the mountains” and “really a personification of the winter and the darkness and the snow getting closer and taking over the land again.”

To make matters worse, Grýla is the matriarch of a family of creatures that join her in preying on or harassing townspeople. One of those creatures is a giant cat named Jólakötturinn.


Jólakötturinn is Grýla’s giant, predatory cat. The beast roams the streets of towns during Christmas time and is said to maul and devour anyone who isn’t wearing new clothes, giving rise to the tradition of buying socks or long johns around Christmas in Iceland. Some historians believe that tales of the cat may have been invented to make people work harder during the holiday season, as those who work more could afford to buy new clothing, according to


Belsnickel is believed to be a companion of St. Nicholas. Legends of Belsnickel originated in Southwestern Germany in the Middle Ages. He appears either clad from head to toe in fur, or simply disguised with his face entirely obscured. He brings gifts of candies and sweets for children in one hand and a switch in the other. In some traditions he gives the candy to good children and leaves a switch with bad children, while in other traditions he scatters the candy on the ground, waits for children to scramble forward and pick up the candy, then switches their backs while they gather candy. The switch is believed to bestow some sort of charm.

Dwight Schrute, played by Rainn Wilson, dressed as the Belsnickel in the hit television show The Office (YouTube screenshot/ The Office US)


Krampus is another of Germany’s fear-based Christmas traditions, spreading terror where St. Nicholas spreads joy. The Krampus is in fact a sort of anti-St. Nicholas, and while St. Nicholas is an agent of God’s goodness, Krampus is a vicious “half goat, half demon” beast, believed to be the spawn of the Hel, the Norse goddess of death, according to National Geographic.

His whole body is covered in hair, his head is horned like the devil, his mouth is full of fangs, and his long, red, slavering tongue hangs out of his mouth like an extra appendage. This creature leaves the rewarding of good children to St. Nicholas, and prefers instead to hunt down bad children, beat them, stuff them in his sack, and abscond with them back to his lair. The demonic, pagan beast comes for his quarry on Dec. 5, known as Krampusnacht.

Men dressed as “Krampus”, a half-goat, half-demon figure that punishes people who misbehaved during Christmas season, take part in an event in Boerwang, southern Germany, on November 24, 2018. (KARL-JOSEF HILDENBRAND/AFP/Getty Images)

Krampus also makes an appearance in Krampuslauf, also known as the Krampus Run, when men dress as the goat demon and prowl the streets of Germany, Austria, Hungary, the Czech Republic, and Slovenia to scare children witless.

Whatever your beliefs are about these distinctly pagan, retribution-based additions to the celebration of Christ’s birth, one thing is certain — they put Elf on the Shelf to shame.

Published:12/25/2018 6:27:30 AM
[Entertainment] From Adam Rippon to Zazie Beetz: The A-Z Guide to Everyone and Everything We Discovered in 2018 The Year In... A-Z Guide to Everyone and Everything We Discovered in 2018Pop culture is all about the joy of the discovery. Think about it. There's nothing better than unearthing something new, something fresh, something you've literally never seen or...
Published:12/25/2018 5:56:21 AM
[Entertainment] Coats To Complete Your Party Look E-comm: Coats To Complete Your Party Look Truth be told, you've put a lot of time and thought into your party look. And you're right to because what you wear represents you. But let's take a beat and...
Published:12/25/2018 5:27:27 AM
[Markets] A Christmas Miracle? More MPs Are Reportedly Backing Theresa May's Brexit Deal

Could Theresa May be on the verge of achieving a Brexit Christmas miracle?

Less than a month after May survived a no-confidence challenge from within her own party after members of the European Council repudiated her pleas for a meaningful concession on the Irish backstop, support for May's unpopular Brexit plan is finally gathering steam, with several rebellious members of the European Research Group and the Democratic Unionist Party apparently ready to support her plan at a vote next month.

To be sure, this support is predicated on the notion that May will be able to win a concession from the EU if her first meaningful vote - scheduled for Jan. 14 - fails. May's chief negotiator, Ollie Robbins, reportedly returned to Brussels last week to continue talks with the European Commission, after the EU said that talks between the two sides had ceased. Robbins is reportedly hoping to strike a deal by the end of the second week in January.


Concessions would make it easier for May to win over a few Brexiteers, including, possibly, ERG leader Jacob Rees-Mogg, the chairman of the group. One of May's cabinet ministers told the Times that securing support from Rees-Mogg was "a work in progress." Some Brexiteers who backed the leadership challenge against May are reportedly facing pressure from their constituencies to cave and support the deal, according to the Times.

Other Brexiteers have come under pressure from their local Conservative Party associations. At least two rebels have been threatened with deselection by their constituency party chairmen after publicly supporting efforts to oust May.

Meanwhile, a recent meeting between May and DUP leader Arlene Foster has reportedly helped thaw the relationship between the two, and could open the door for May to win back support of the DUP, who have been making noises about possibly supporting Jeremy Corbyn's push for a vote of no confidence in May's government.

The relationship between the Tories and the DUP, which has been in the deep freeze, appears to be thawing.

It follows a successful one-to-one meeting between May and Arlene Foster this month when the DUP leader "saw the whites of May’s eyes and realised she was serious about securing concessions on the backstop," an ally said.

After May and her senior ministers reportedly started discussing alternatives to her Brexit plan, the Times said it's becoming increasingly clear that the EU will ultimately offer concessions - but that they won't come right away, and that May's deal may need to be defeated in a vote first. Then, May's team says it's looking increasingly likely that a second vote could be successful - which would validate May's strategy of running out the clock.

It is understood that the changes required by the DUP are significant and the EU is not going to offer them straight away.

It is now expected that the government could bring forward a second vote within two days if May’s deal is voted down when the meaningful vote is held in the week beginning January 14.

"It’s now very much our expectation that we can win this vote, if not the first time then the second time around," according to a senior government source.

May is reportedly hoping to capitalize on this growing moment by inviting Tory MPs to a party at No. 10 during the first week of the year. In another sign of support for May, the Times reported that May's cabinet ministers are devising a plan to keep her in power for at least another two years - a plan that has been buoyed by "a substantial shift in the vote arithmetic" regarding May's deal.

Meanwhile, in an end of the year letter published in the Express, May urged MPs to unite and back her plan so that Parliament can move on and focus on domestic issues, which have been largely neglected since the Brexit process began more than 2 years ago. She demanded that lawmakers abandon the "Leave" and "Remain" labels and come together to ensure that the will of the voters is carried out.

If May does secure the votes for her deal, that victory will go a long way toward vindicating her approach of ratcheting up pressure by running out the clock. However, this wouldn't be the first time we've heard that the EU is on the verge of offering concession, only for them to tell May to 'drop dead'.

Published:12/25/2018 4:27:06 AM
[Markets] UN Climate 'Changers' Shoot Down Santa?

With NORAD tracking his every move, it was only a matter of time...

Source: MichaelPRamirez


Published:12/25/2018 3:26:08 AM
[Entertainment] Khloe Kardashian and Other Stars Celebrate Their First Christmas as Parents True Thompson, Instagram, Christmas 2018It's baby's first Christmas! Khloe Kardashian, Eva Longoria, John Stamos and Gabrielle Union are among stars who are celebrating their first Christmas as...
Published:12/24/2018 11:56:38 PM
[Markets] A Horrified Wall Street Reacts To The Mnuchin Massacre

Heading into December, a majority of traders still quietly hoped that the volatility observed in October and November would finally fade , and give way to the traditional Santa rally: after all, in the past century, December has not only been the month with the highest average stock market return, but the month which has closed in the green on 74% of instances, the most of all other months of the year.

Alas it was not meant to be: instead of being the best month of the year, this December has been the worst month for the stock market since the Great Depression - the average one-day drop in the S&P this month has been 1.6% -  and was appropriately capped with a Christmas Eve crash which not only saw it plunge almost 3% - the biggest pre-Christmas plunge on record - closing at a 20-month low, but in the frenzied liquidation which saw more than 1.7 billion shares changing hands in the painfully illiquid half-day session which deepened losses after the worst week since 2011, as it closed, the S&P triggered a bear market, sliding 20% from the Sept 20 all time highs, and putting an end to the longest bull market in history.

While the reasons for the relentless three month selloff are legion, starting with the "renormalization" (i.e., bursting) of the biggest asset bubble blown in history by the Fed and other central banks, and continuing through trade war tensions, rising and/or falling interest rates, political gridlock and instability in the US and elsewhere, peak profit fears, and economic slowdown concerns, the immediate catalysts for today's plunge are two: Trump's ongoing feud with the Federal Reserve (which today we learned, can't putt) and its Chairman, Jerome Powell, who may or may not be fired soon, and Mnuchin bizarre, crisis-era announcement that bank liquidity is fine, even though not a single person in the market doubted that not to be the case, prompting a chill down traders' spines that bank liquidity was not, in fact, fine.

So while we got the market's verdict loud and clear to what will forever be known as the "Mnuchin Massacre", here is a sample of what analysts, investors and pundits are saying:

Cowen & Co.’s Jaret Seiberg

  • “None of these controversies are positive,” the senior policy analyst wrote. “All of them put the economy at risk, which is negative for financial firms and housing. And all three incidents are unforced errors," Seiberg wrote, referring to Trump’s discussion of Fed Chairman Jerome Powell’s ouster, the partial government shutdown and Mnuchin raising questions about financial stability.
  • "Our broad concern is that Team Trump might trigger the very downturn it wants to avoid."

Amundi Pioneer Asset Management’s, Paresh Upadhyaya

  • Mnuchin’s statement about banks “clearly backfired,” Upadhyaya said. “It smacks of desperation and nervousness. I found it odd that he spoke to them about liquidity when it’s obvious that banks would be aware of it. I’m not sure what they planned to achieve with this plunge protection team since none of the agencies involved have legal authority to intervene in the equity markets.”
  • The portfolio manager sees little risk of Powell being ousted. He said that Trump’s undermining of the Fed could reduce the appeal of the U.S. dollar. What’s more troubling is the selloff in bank stocks, which signals distress in the credit market.

MRV Associates Inc.’s Mayra Rodriguez Valladares

  • “The timing is terrible” amid thin markets before a holiday, said Valladares, a former Fed foreign-exchange analyst who conducts training for bankers and regulators. “It’s going to make people in the markets even more nervous.”
  • “When you have a president treating Powell as a pinata, it’s really terrible and undermines the credibility of the central bank as an independent authority.”

Whalen Global Advisors’ Christopher Whalen

  • Mnuchin’s tweet about his talks with bank CEOs was “not helpful,” Whalen said.
  • “It is normal for a secretary of the Treasury to talk to banks privately, but not on Twitter,” he said, citing a “near disaster” in 2008 when markets cratered after then-Treasury Secretary Henry Paulson discussed buying bad bank assets.

Sullivan & Cromwell LLP’s Rodgin Cohen

  • Cohen was at the center of the bank bailouts during the 2008 financial crisis. He said he didn’t field calls from finance executives over the weekend, an indication that the industry isn’t facing the same concerns it was a decade ago.
  • “If you ever get contagion, that could sweep away reality and logic,” Cohen said in an email. “But today, we just don’t have anything like 2008. You’ve got banks which have two to three times the capital, and even more importantly -- what really brings banks down -- is a liquidity shortage. And these banks are incredibly liquid.”

Last but not least, here is Maxine Waters, soon to be the Chair of the House Committee on Financial Services:

  • "The financial markets need certainty, and a Federal Reserve that can independently set monetary policy. The recent actions of the President and the Treasury Secretary, however, have been erratic and are creating uncertainty and instability in the markets. It would be in our nation’s best interest if they stopped what they are doing."

And the scariest news: there are 3 more trading days in 2018, and at this rate we may be looking at a 1-handle in the S&P as we usher in the new year.

Published:12/24/2018 9:55:11 PM
[Entertainment] Will Smith and Other Celebs Share Heartwarming Christmas Photos Will Smith, Jada Pinkett Smith, Trey Smith, Willow Smith, Jaden Smith, Christmas 2018The Smiths sure know how to Christmas! Will Smith posted on his Instagram page on Christmas Eve a gorgeous, super festive photo of him and his family--wife Jada Pinkett Smith, her mother...
Published:12/24/2018 8:55:05 PM
[Markets] The Best Places In America For Christmas Celebrations

Authored by Adam McCann via,

It’s the most wonderful time of the year - or at least it can be, depending on where you celebrate Christmas. That’s because America’s favorite holiday is also one of the most expensive. From decorations and food to gifts and travel, there’s a long list of expenses to check twice and save up for during the year.

In 2018, Americans are projected to spend up to $720 billion over the holidays, according to the National Retail Federation. The average person plans to spend $1,007.24. If you don’t have a reasonable holiday budget — or enough self-control — then your Plan B should definitely include celebrating in the cheapest Christmas destinations. Overspending is a common mistake committed by consumers during the Christmas shopping season and one of the top sources of holiday stress.

But beyond ensuring its affordability, a successful holiday also hinges on a location’s Christmas-friendliness. Typical Christmas activities include shopping, dining out and attending holiday events, so the availability of such options can make all the difference. Many people also are likely to attend church services, considering Christmas is a Christian holiday. The more churches around, the less likely each is to be crowded.

WalletHub considered all of those factors to determine where you’re guaranteed to enjoy a holly jolly Christmas whether you’ve been naughty or nice. More specifically, we compared the 100 biggest U.S. cities based on 31 key indicators of a festive and affordable Christmas, such as traditions, shopping and costs.

Main Findings

Source: WalletHub


Best Cities for Christmas


Worst Cities for Christmas

*  *  *

Full methodology here...

Published:12/24/2018 8:55:05 PM
[Entertainment] Norman Reedus Shares First Photo of His and Diane Kruger's Baby Girl Diane Kruger, Norman Reedus, 2018 Critics' Choice AwardsMeet Daryl Dixon's own real-life Lil' Ass Kicker. This Christmas is a particularly special one for Norman Reedus and Diane Kruger: It is their first one with their baby girl. In...
Published:12/24/2018 8:26:21 PM
[Markets] Sydney High-Rise Evacuated After Residents Hear "Cracking" Sounds

Some 3,000 residents of Sydney's Opal Tower, an apartment in the city's Olympic Park, are facing the possibility of spending Christmas in an emergency evacuation shelter after the building - and all buildings within a 1 kilometer "exclusion zone" - was evacuated following signs of "cracking" in the 33-storey building that have stoked fears about a possible collapse.

Emergency responders were called to the building Monday morning after residents on the tenth floor reported hearing loud "cracking" noises. An initial investigation determined that the building had moved one or two millimeters, according to the Guardian. Laser monitors are being used to scan for any additional movement in the building.

Though details about the evacuation are still trickling out, the Associated Press reported that police had to use heavy equipment to force open doors to allow residents to escape. Neighboring buildings have also been evacuated.


The tower has almost 400 one, two, three and four bedroom apartments, with two bedrooms selling for nearly $1 million. The tower is situated over the central site of the 2000 Sydney Olympics.

Fire officials in the city said it was "too soon" to tell on Monday whether the building was in danger of collapse. Acting Superintendent Greg Wright said his department couldn't offer a time estimate for how long the inspections would take. Water, gas and electricity service to the building has been shut off.

"We don’t know that until the engineers assess the building and have a look at what caused the issue and if there is a major issue with the building...It’s not going to be done in minutes. Hopefully it doesn’t take much longer than hours," he said.

Residents had been taken to the Royal Agricultural Society Hall, but many have now been rehoused. Meanwhile, trains will skip the Olympic Park stop that runs near the building. Buses will serve the area instead, according to Channel 9 News.

The engineering firm that helped build the tower released a statement after the evacuation describing a potential complication that may have contributed to the "cracking" sounds.

Wood & Grieve Engineers, who worked on the building, said online: "The large structural offsets at the base of the towers created a particular challenge. The difficulty was in the coordination of transferring sewer and storm water services through the deep transfer beams and large transfer slabs."

"Due to the height of the building which imposes excessive pressures on the pipework and fittings installed on the lower half of the building, the WGE team came up with a unique dual stage pressure control concept and conducted a series of experimental tests to simulate the real working condition of the system before specifying it for installation in the building."

Roads have been blocked around the building, including both sides of Australia Avenue. But one event that hasn't been canceled is a BBL cricket match between Sydney Thunder and the Sydney Sixers, which will be held at Spotless Stadium. Fans have been asked to travel to the stadium by bus and enter through a side entrance.

Published:12/24/2018 7:54:42 PM
[Entertainment] Justin Bieber and Hailey Baldwin and Other Stars Celebrate First Christmas as a Married Couple Joe Jonas, Sophie Turner, Frankie Jonas, Priyanka Chopra, Nick Jonas, Denise Jonas, Madhu Chopra, Kevin Jonas Sr., Christmas 2018Justin Bieber and new wife Hailey Baldwin Bieber added a new family member, just in time for their first Christmas as a married couple. The singer and the model recently acquired a puppy,...
Published:12/24/2018 7:23:26 PM
[Markets] New York City Loses Over 130 Residents Each Day In Middle Class Exodus

New York City's dwindling middle class has been leaving the city in droves, as the city loses over 130 residents every day according to the latest US Census data. 

Comprising 48% of city residents, those with annual incomes between $30,000 and $60,000 are feeling the squeeze from higher living costs, wage stagnation and high taxes that whittle away at disposable income. New York's exodus is topped only by Chicago, according to the data analyzed by Bloomberg

For comparison, around 61% of New Yorkers were considered middle class in the 1970s. 

"The middle class is getting squeezed," says economist Peter C. Earle of the American Institute for Economic Research. "The rich in New York City are getting richer; the poor are actually getting richer, but not rich enough to be middle class." 

According to Earle, it isn't unreasonable to assume middle-class incomes have fallen at a more rapid pace in NYC due to the city's disproportionately high living costs. 

of the estimated 175,000 net new private-sector jobs that have been created in New York City since 2017, fewer than 20 percent are paying middle-class salaries, Earle notes.

The arrival of highly paid Amazon jobs in Long Island City will hardly make a dent in that situation, say analysts. And if anything, the estimated $3 billion in subsidies could saddle taxpayers with huge long-term debt, they add. -New York Post

As the Post notes, one need look no further for evidence of the shrinking middle class than "borded-up retail stores," which reflect "rising rents and slackening consumer demand." 

National chain-store locations have plunged in the city by 0.3 percent, to 7,849, this year, according to the Center for an Urban Future. And a record 18 chains, including Aerosoles and Nine West, vacated all their city sites in 2018.

One sector doing a booming “business” is food pantries. Despite a city unemployment rate of 4%, New York food pantries report elevated levels of demand, especially during the holiday season. -New York Post

Contrary to the stock-market linked troubles facing most Manhattanites, over one million New Yorkers have reported worrying that they don't have enough food to feed their families.

Published:12/24/2018 6:59:27 PM
[Entertainment] Why horror classic ‘The Exorcist’ doesn’t feel all that scary 45 years later 'The Exorcist' is marking its 45th anniversary, but the horror classic starring Linda Blair is much less scary to watch in 2018 than it was in 1973.
Published:12/24/2018 5:53:24 PM
[Markets] Biden Beats Trump; Trump Beats Beto In 2020 Poll

A new poll from The Hill and HarrisX has former Vice President Joe Biden beating President Trump in a hypothetical 2020 matchup. The survey finds Biden ahead 42 percent to Trump's 36 percent.

The same poll has President Trump beating Democrat Beto O'Rourke (D-TX) 37 percent to 30 percent, while former presidential candidate Sen. Bernie Sanders (I-VT) was nearly dead-even with Trump at 37 percent and Sanders at 38 percent. 

Progressive strategist Ruy Teixeira said in an interview that aired Monday on "What America's Thinking," that while it's too early to start polling on 2020 contenders, it does not surprise that Biden matches up well against Trump. 

"It's really early to be polling on this," Teixeira, a senior fellow at the Center for American Progress, told Hill.TV's Jamal Simmons. 

"It doesn't surprise me that Biden runs relatively well against Trump. He's got 100 percent name recognition, he's a likable guy. I think he'd play well in different areas of the country that the Democrats haven't done so well in," he added. -The Hill

That said, polls in the 2016 Trump-Clinton race served as contrarian indicators - while The Hill is a liberal outlet, so take all of that with as many grains of salt as needed. 

The Hill-HarrisX poll is a joint project of The Hill's new online TV division, Hill.TV, and the HarrisX polling company that surveys 1,001 Americans a day on the issues of the day in politics and policy. The Dec. 16-17 survey has a sampling margin of error of 3.1 percentage points. -The Hill

Last week the Democratic National Committee (DNC) announced a dozen primary debates in 2019 and 2020 - however no word on which candidate(s) they'll leak debate questions to ahead of time

President Trump on Friday mocked O'Rourke, who lost his Senate bid in November - telling reporters "I thought you were supposed to win before you run for president!." 

Sanders, meanwhile, was a strong contender in 2016 - only to have the DNC and Clinton campaign conspire against him; denying him access to key Democratic voter information, while giving Hillary Clinton debate questions ahead of time. Many have suggested that Sanders could have beaten Trump if he had prevailed in the primaries. 

Biden has left his options open in 2020. 

Published:12/24/2018 5:23:56 PM
[Entertainment] Kendall Jenner Pokes Fun at ''Awkward'' Family Christmas Photo Kendall Jenner Kendall Jenner is letting her nieces and nephews take the spotlight in this year's Christmas card. The Kardashian family Christmas card was revealed on Christmas Eve morning, and to...
Published:12/24/2018 4:53:58 PM
[Markets] Where Are Rates Going In 2019

Authored by Lance Roberts via,

Last Monday, Jeff Gundlach, famed bond fund manager and CIO of Doubleline, made an interesting comment during an interview with CNBC when he stated that the 10-year Treasury yield would top 6% by 2020 or 2021.

6% would be the highest yield since 2000.

The chart below shows Gundlach’s estimated yield as compared to the long-run range of economic growth. (Note that real GDP growth was running at 5.27% in 2000 as compared to 3.0% today which is also getting weaker.)

As I discussed last week, interest rates are a function of the economy. So, while Jeff suggests that yields are rising to 6% in the next couple of years, such would suggest an extremely strong rebound in economic growth. Unfortunately, there is no evidence currently of a major upturn in economic growth due to surging deficits, debts, demographic, and employment trends. Further productivity trends mean such an upturn in economic growth could only come from a massive surge in debt. Is that likely to happen given our indebted state already?

The biggest problem with rising rates is the negative impact from higher borrowing costs. Given that consumption makes up 70% of economic growth, and that consumers are heavily indebted, a change in rates has an immediate impact to consumption. Take a look at the chart below of the Total Housing Activity Index versus 30-year mortgage rates.

But it isn’t just housing, but everything from automobiles to iPhones. When interest rates rise to a point to where the consumer can no longer afford the payment, the buy decision changes to either a lower priced product or a postponement of the purchase. More importantly, the change to the purchase mentality (either reduction or postponement) specifically slows the rate of economic growth.

Given the structural backdrops to the economy, there is an inability to substantially increase rates of productivity, output, wage growth, savings, or consumption which would lead to stronger rates of economic growth. In fact, we are currently running some of the weakest rates of economic growth, productivity, and wages on record.

The annual rate of economic growth back in the late 70s, early 80s, was between 6 and 8 percent. Today, the long-run outlook for the economy is closer to 2% which is the terminal result of a 40-year long debt-driven expansion. Given that long-run projections of economic growth are between 1.5-2.5%, such means that the 10-year Treasury should run at about the same level. It is simply not feasible for rates to levitate to 4, 5, or 6% when economic growth is unable to support higher rates. Inflation, interest rates, wages, and economic growth are all tied to the consumer.

And the consumer is pretty much tapped out as credit card debt hits all-time highs and most Americans say they didn’t get a pay raise at their current job, or start a better paying job, in the last 12 months, according to a Wednesday survey from

“According to the poll, 62% of Americans report not getting a pay raise or better paying job in the past year – up from 52% last surveyed last year. That said, just 25% of respondents in this year’s survey said they would look for a new job in the next year.”

It’s The Deficit

So, if economic growth is going to remain weak, then what other reason would cause rates to rise?

Jeff made a valid point about the issue of the deficit suggesting such will ultimately be the catalyst for rates to rise.

This is a topic I have discussed much previously:

“While the markets have been the beneficiary of the tax cut legislation, which gave a short-term boost to corporate profitability, the economy has enjoyed a boost from the massive increases to spending from what should have been more aptly termed the ‘Bipartisan Non-Budget Act of 2018.’ Notice in the chart below the pickup in economic activity has coincided with a surge in the deficit. Spending on natural disasters and defense spending increases ‘pull forward’ future economic growth which is an illusion of an economic turn.”

Importantly, surges in budget deficits as a percentage of GDP, are normally associated with ‘recessionary’ activity in the economy. As noted, the increases in Federal spending create a temporary boost to economic growth which supports higher asset prices. Currently, the government is running one of the largest deficits, in both dollar terms, and as a percentage of GDP, in history. This is occurring at a time when the economy is ‘booming’ and deficits should be reduced for the next ‘rainy day.’” 

“Furthermore, with sequester-level budget caps returning next year, the budgetary issues in Washington will become even more complicated. The last time budget-caps came into play Ben Bernanke launched QE-3 to offset the economic drag from expected reductions in government spending. However, given the recent track record of the ‘conservative’ Congress, it is highly likely spending will be increased further in the months ahead. Look for an even larger ‘C.R.’ in December when the current resolution runs out.”

Jeff’s point is one that has been made many times previously by others. The basic premise is that as the deficit expands, it will require more debt to be issued. The problem comes when the demand to purchase that debt does not keep up with the supply. Up to this point, America has been fortunate to maintain its role as the world’s reserve currency which means foreign nations hold Treasuries in their reserve accounts. But, as Jeff states, there are many countries now looking for an alternative. The problem for America comes as the status of “reserve currency”diminishes.

I both agree and disagree with Jeff on this point.

I agree that other countries are looking for alternatives to the dollar as a reserve currency. However, there are two primary reasons why this will likely not be a real threat soon:

  1. If you are any other country where are you going to store your reserve currency: China, Russia, India, Brazil, the Eurozone? Many of these economies are corrupt, weak, too small, or a combination of all three.

  2. When global investors are seeking “safety” from “risk,” where are they going to go?

Both of these reasons have the same foundations:

  1. Liquidity: the U.S. Treasury market is vastly deep and can support billions in transactions without a major dislocation.

  2. Safety: despite all of the flaws in the U.S., it is still the safest country in the world to conduct business with. While there are certainly many issues, the “rule of law” in the U.S. still provides a relative level of safety for storing capital not found in other countries.

  3. Return: the rate on U.S. Treasuries is high enough to attract capital from other areas as a “safe” store of value.

  4. Dollar Value: the rising U.S. dollar is attracting capital flows from weaker currencies and economies.

I have repeatedly stated that when the market rout gets bad enough, money will flow into the “safest of havens” – the U.S. Treasury. Over the past month, this is exactly what happened.

“As a result of this pre-deflationary deluge, investors have flooded into bonds and out of stocks, while within equities there were large moves into defensives via energy and tech into staples and utilities. More importantly, this month’s survey found the biggest ever one-month rotation into bonds class as investors dumped equities around the globe while bond allocations rose 23ppt to net 35% underweight….”

Jeff’s premise is that with all of the new debt needing to be issued by the government to fund their ongoing fiscal largesse, there is a risk that “our neighbors” will not be “gracious lenders” in the future. As such, the “dollar funding”issue causes rates to soar higher until “buyers” can be found.

While I am certainly not denying such is indeed the risk. There isn’t a lot of historical precedents that such is the case with a mature, strong, industrialized country. Japan, as an example, is vastly indebted with a soaring budget deficit, weak economic growth, and does not maintain a “reserve” currency status. Yet, after 30-years, interest rates have failed to rise.

Notice that since 1998, Japan has not achieved a 2% rate of economic growth.

Even with interest rates still near zero, economic growth remains mired below one-percent, providing little evidence to support the idea that inflating asset prices by buying assets leads to stronger economic outcomes, or that rising budget deficits means higher rates.

The real risk to the domestic economy is that Jeff is right.

If interest rates do rise sharply it is effectively “game over” as borrowing costs surge, deficits balloon, housing falls, revenues weaken and consumer demand wanes. It is the worst thing that can happen to an economy that is currently remaining on life support.

Japan, like the U.S., is caught in an on-going “liquidity trap”  where maintaining ultra-low interest rates are the key to sustaining an economic pulse. The unintended consequence of such actions, as we are witnessing in the U.S. currently, is the ongoing battle with deflationary pressures. The lower interest rates go – the less economic return that can be generated. An ultra-low interest rate environment, contrary to mainstream thought, has a negative impact on making productive investments and risk begins to outweigh the potential return.

More importantly, while there are many calling for an end of the “Great Bond Bull Market,” this is unlikely the case for two reasons.

  1. As shown in the chart below, interest rates are relative globally. Rates can’t rise in one country while a majority of global economies are pushing low to negative rates. As has been the case over the last 30-years, so goes Japan, so goes the U.S.

  2. Increases in rates also kill economic growth which drags rates lower. Like Japan, every time rates begin to rise, the economy rolls into a recession. The U.S. will face the same challenges. 

Unfortunately, for the current Administration, the reality is that cutting taxes, tariffs, and sharp increases in debt, is unlikely to change the outcome in the U.S. The reason is simply that monetary interventions, and government spending, don’t create organic, sustainable, economic growth. Simply pulling forward future consumption through monetary policy continues to leave an ever-growing void in the future that must be filled. Eventually, the void will be too great to fill.

Where Are Rates Headed In 2019

So where are rates headed. Dr. Lacy Hunt of Hoisington Investment Management had a good take:

“The U.S. economy appears to be on a steadily declining path to recession and disinflation/deflation. This may seem improbable in the face of record year-over-year growth in nominal GDP over the past decade.

Significantly, U.S. monetary restraint has caused a similar slowdown in local currency money growth around the world. Additionally, velocity in Japan, the Euro area and China has been declining secularly since the late 1990s, as debt has become increasingly less productive. Since money times velocity (i.e. its turnover) determines GDP in all countries, this cumulative global economic slowdown should impact U.S. economic activity.

 From the standpoint of an investment firm that started in 1980, when 30-year bond yields were close to
15%, the current 30-year treasury rate at 3% seems ridiculously low. In the near future, at 1.5%, the 3% yield will seem generous ”

I agree.

Currently, interest rates are at a level that has historically led to some sort of event. Whether it was economic, financial, or both, there is no real precedent which suggests rates could rise another 3% from here without severe ramifications. Of course, as the market declines, the demand for “safety” would ultimately push rates lower.

At some point, the Federal Reserve is going to step back in and reverse their policy back to “Quantitative Easing”and lowering Fed Funds back to the zero bound.

When that occurs, rates will not only go to 1.5%, but closer to Zero, and maybe even negative.

Published:12/24/2018 4:53:58 PM
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Published:12/24/2018 4:24:01 PM
[Markets] OPEC+ Deal Not Enough To Save The Oil Market

Authored by Nick Cunningham via,

If the goal of the OPEC+ cuts was to boost oil prices, then the deal is clearly failing.

OPEC+ is scrambling to figure out a way to rescue oil prices from another deep downturn. WTI is now down into the mid-$40s and Brent into the mid-$50s, both a 15-month low. U.S. shale continues to soar, even if shale producers themselves are now facing financial trouble with prices so low. Oil traders are clearly skeptical that OPEC+ is either willing or capable of balancing the oil market.

OPEC+ thought they secured a strong deal in Vienna in early December, but more needs to be done, it seems. OPEC’s Secretary-General Mohammad Barkindo wrote a letter to the cartel’s members, arguing that they need to increase the cuts. Initially, the OPEC+ coalition suggested that producers should lower output by 2.5 percent, but Barkindo said that the cuts need to be more like 3 percent in order to reach the overall 1.2 million-barrel-per-day reduction.

More importantly, the group needs to detail how much each country should be producing. “In the interests of openness and transparency, and to support market sentiment and confidence, it is vital to make these production adjustments publicly available,” Barkindo told members in the letter, according to Reuters. By specifying exactly how much each country will reduce, the thinking seems to be, it will go a long way to assuaging market anxiety about the group’s seriousness.

Still, the plunge in oil prices this month is evidence that traders are not convinced.

The view is “that the U.S. will continue to grow like gangbusters regardless of price and overwhelm any OPEC action,” Helima Croft, the chief commodities strategist at Canadian broker RBC, told the Wall Street Journal.

“Unless there is a real geopolitical blowup, it could take time for these cuts to really shift sentiment.”

While cuts from producers like Saudi Arabia will help take supply off of the market, OPEC might help erase the surplus in another unintended way. Bloomberg raises the possibility that low oil prices could increase turmoil in some OPEC member states. The price meltdown between 2014 and 2016 led to, or at least exacerbated, outages in Libya, Venezuela and Nigeria. The same could happen again.

Just about all OPEC members need much higher oil prices in order to balance their books. Saudi Arabia needs roughly $88 per barrel for its budget to breakeven. Libya needs $114. Nigeria needs $127. Venezuela needs a whopping $216. Only Kuwait – at $48 per barrel – can balance its books at prevailing prices. Brent is trading in the mid-$50s right now.

That raises the prospect of more unrest. Venezuela’s supply losses are assured – and largely already factored into market forecasts – although the rate of decline remains uncertain. But further unexpected outages are possible, and become more likely with lower prices. Libya and Nigeria are the most likely sources of instability. Unexpected disruptions in supply in 2019 could tighten up the market.

Still, while there are many problems facing OPEC+ as it seeks to balance the market, one important factor lies mostly out of the group’s control. Much of the OPEC+ discussion focuses on supply-side dynamics – how much the group should be producing in order to achieve some price target. But the problems sweeping over the oil market right now could be even larger.

Specifically, a global economic slowdown could translate into much slower demand, a problem that OPEC+ cannot fix. Sinking oil prices isn’t just a matter of market expectations of oversupply from U.S. shale.   

The financial turmoil and brewing economic slowdown is clearly overwhelming the OPEC+ cuts, as well as the jawboning that some OPEC officials have tried over the past week. Stock markets plunged in recent days after the Federal Reserve tightened interest rates yet again and signaled two more rate hikes in 2019.

There haven’t yet been any dramatic revisions to 2019 oil demand from leading energy forecasters, such as the EIA or IEA. But, then again, the financial instability and the souring oil market have only cropped up recently. The IEA has maintained a 1.4-mb/d growth rate for demand next year, but take that with a grain of salt. Demand revisions could be forthcoming. OPEC+ may have to keep its supply curbs in place for the full year in 2019, but it’s unclear if even that can push prices back up to where they were two months ago.

Published:12/24/2018 3:55:41 PM
[Markets] Venezuelan Women "As Young As 14" Escape Socialism By Selling Sex, Hair And Breastmilk

Women fleeing socialist Venezuela have taken to capitalism in order to survive; selling sex, hair and breastmilk as they make the perilous journey into neighboring Colombia in search of a better life. 

As Fox News' Hollie McKay reports, the Colombian border city of Cucuta is virtual chaos - as "Rail-thin women cradle their tiny babies, and beg along the trash-strewn gutters. Teens hawk everything from cigarettes to sweets and water for small change." 

The young, the old and the disabled cluster around the lone Western Union office – recently established to deal with the Venezuelan influx – in the hopes of receiving or sending a few dollars to send home. Without passports or work permits, the Venezuelans – many with university degrees or decent jobs in what was once the wealthiest nation in Latin America – are now resorting to whatever it takes to survive. -Fox News

Men buying hair approach groups of women with their young children, offering them enough to feed their families for a short while. Local wigmakers in Colombia will pay between $10 - $30, depending on length and quality. 

Other Venezuelan women - including girls as young as 14, resort to sex work on the streets of Cucuta - earning around seven dollars per john. 

Both men and women are exposed to sex trafficking along the route from Venezuela to Colombia. According to several walkers, some women “chose” prostitution as a means to make money and earn rides along the way. And some heterosexual men “sell themselves on the gay market” for a little money.

Other women are manipulated or forced into giving “pimp types” their documents and identification cards, and are subsequently drawn into prostitution rings. That's particularly the case in border areas, where many rebel and drug-trafficking groups operate. -Fox News

Back home in Venezuela, the situation is dire - as the socialist country suffers from starvation, disease, a lack of healthcare and extreme violence. Children have been dying from hepatitis and malaria. 

"There is a human catastrophe in Venezuela. There is a resurgence of illnesses that were eradicated decades ago. Hundreds have died from measles and diphtheria. Last year, more than 400,000 Venezuelans presented malaria symptoms. Up to now, there are over 10,000 sick people from tuberculosis," said Caracas mayor and former political prisoner Antonio Ledezma, adding: "People have been doomed to death. More than 55,000 cancer patients don’t have access to chemotherapy. Every three hours a woman dies due to breast cancer."

Caterine Martinez, an attorney, and director of the Prepara Familias (Ready Families) organization in Venezuela – which endeavors to support hospitalized children and their families and caregivers – concurred that the public health care issue in the country is nothing short of “severe.”

Currently there are no broad-spectrum antibiotics, not even basic antibiotics to treat basic pathogens from children and present chronic illnesses,” she said. “We don’t have x-rays working, they haven’t for a long time. We don’t have a CAT scanner or an MRI scanner. Many other vital medical instruments don’t work. The municipal blood banks don’t have reagents, therefore we have kids who are getting blood transfusions and are getting infected with hepatitis C and could even be injected with HIV.” -Fox News

Suicide rates have also skyrocketed according to Fox - even among children. A Venezuelan children's rights group, CECODAP, has estimated an 18% rise in teens killing themselves over the last year. 

Martinez estimates that over 55 percent of healthcare professionals - including doctors and nurses, have left Venezuela, while resident doctors who have remained make a scant $24 per month. Specialists can make $30. 

"We also have a severe problem with nutrition. There is no supply of baby formula, nor nutritional supplements. Therefore, we have a lot of malnourished children and the situation is then even more complicated," said Martinez. 

Julio Castro Mendez, a doctor who specializes in infectious diseases and is a Professor at the Medical Institute at the Central University of Venezuela, underscored that 65 percent of the country’s 70,000 patients with HIV have not received treatment in the past six months. Coupled with astringent malnutrition, some of his adult male patients have dwindled down to 77 pounds, he said.

“Maternal and infant mortality has also increased significantly in recent years, by more than 65 percent,” he added. “More than half of the deliveries in Cucuta are Venezuelan women who cross the border to that babies in environments that are more secure and better-equipped,” Mendez explained. -Fox News

Meanwhile, as Venezuelans suffer through survival conditions there is virtually no family planning - while Fox reporting some birth control pills are simply duds with no effect. As such, hospitals in neighboring countries - especially Colombia - have seen an influx of Venezuelan women who have crossed the border to give birth. 

"The level of women crossing the border to give birth has dramatically increased," said Miguel Barreto, Regional Director for Latin America for the UN's World Food Program WFP). "The forecast is for this only to get worse in 2019, so we plan to increase our response." 

Others in Venezuela are dying of starvation - with some women trying to support others by selling or donating their breast milk as a way to help or support their own families. 

"70 percent of people are facing steep food insecurity and acute malnutrition," said Barreto. This has led to crime in some instances - with children even sabotaging vehicles carrying food in order to hold up drivers

Not only do Venezuelan residents troll through trash cans looking for scraps, but many – including children – hide along roadsides and wait for a moment to strike, where they toss rocks at passing vehicles, or blow out tires with metal strip. Then they either steal or hold up the vehicle in the hopes of bargaining for food. Or they might loot a passing food government truck – making the job even more dangerous for the drivers.

The food trucks carry Venezuelan President Nicolas Maduro’s trademark boxes of subsidized food, known as CLAP. They were intended to feed a family of four for at least a week. But if and when the boxes come at all, Venezuelans claim, they are often spoiled.  -Fox News

Making life worse for Venezuelans is the rampant crime and violence permeating the country. 

"It is complete anarchy. There are tens of thousands of these gangs – Cuban and Venezuelan – who operate in every state," said a former Caracas security guard who was shot in the stomach by government-backed street gangs known as the "collectivos." 

"I have only managed to survive this long thanks to Jesus and the Holy Spirit." 

Published:12/24/2018 3:23:47 PM
[Entertainment] Khloe Kardashian Reveals Why Kendall Jenner ''Chose'' Not to Be in Christmas Card Khloe Kardashian, Kris Jenner, Kendall JennerKhloe Kardashian is defending Kendall Jenner's decision to not be in the family Christmas card. Hours after Khloe and Kim shared the cute photo, fans began to flood their accounts...
Published:12/24/2018 2:53:40 PM
[Markets] The Five Most Outrageous Professor Statements Of 2018

Authored by Grace Gottschling via Campus Reform,

Campus Reform rounded up five of the most outrageous instances of college faculty and staff who have made statements describing violent acts and inflammatory rhetoric...

1. Yale law prof encourages people to ‘hide immigrants from ICE’

In July, Campus Reform reported on a Yale University professor, Gregg Gonsalves, who suggested on Twitter that “we hide immigrants from ICE if we have to." 

The law professor, who did not have a law degree at the time of this initial report, insisted that this would be an act of “civil disobedience,” rather than aiding and abetting criminals.

Gonsalves had made multiple social media posts at the time in support of publicly releasing ICE agents' personal information, an act commonly referred to as "doxxing," stating: “I have no qualms about showing up at ICE regional directors’ homes. They can leave their jobs at the office and feel free from scrutiny at home. Lucky them.” 

2. Brooklyn College Prof: Trump's immigration policy goal is to inflate ‘body count’

A Brooklyn College professor of Constitutional Rights and Political Science, Anna O. Law, made several social media posts in July regarding her opinion on immigration. 

“Trump’s immigration policy is about inflating 'body count' stats, not about removing dangerous criminals,” Law wrote. “If you’re in the wrong place at the wrong time, without proof of citizenship on your person...any brown person will do.”

Law later responded to her tweet, adding, “Reason, why I’m pointing this out, is that since Trump has now formed a de-naturalization force, one’s citizenship via naturalization is tenuous and apparently contingent on whether the Admin is nativist. Why then tie precious barrels of rights to it?” 

Law made a subsequent tweet claiming that “ending birthright citizenship” is a “white supremacist move.”

3. Georgetown University Professor: White GOP senators in Kavanaugh hearing 'deserve miserable deaths'

In September, Christine Fair, a Distinguished Associate Professor at Georgetown University, repeatedly posted about then-Supreme Court nominee Brett Kavanaugh and the GOP deserving to die.

“Look at thus [sic] chorus of entitled white men justifying a serial rapist's arrogated entitlement,” Fair tweeted, appearing to reference a video of "Lindsey Graham's tirade," adding that “all of them deserve miserable deaths while feminists laugh as they take their last gasps." 

Fair continued her thoughts on the hearings and the GOP by tweeting, “Bonus: we castrate their corpses and feed them to swine? Yes.”

Following Campus Reform’s initial report on Fair’s comments, she made specific posts on her blog targeting student journalists in Campus Reform’s Correspondent program. 

As of December, Fair is still employed by Georgetown University, although she is on "research leave." 

4. Minnesota State University Professor: Virgin Mary didn’t give consent

A Minnesota State University psychology professor, Eric Sprankle, tweeted his opinion that the Virgin Mary, a minor, did not consent to become pregnant with Jesus Christ. 

When met with negative criticism of his view on Twitter, Sprankle further explained his position, saying that “the biblical god regularly punished disobedience. The power difference (deity vs mortal) and the potential for violence for saying ‘no’ negates her ‘yes.’” 

“To put someone in this position is an unethical abuse of power at best and grossly predatory at worst,” Sprankle concluded.

5. Northeastern University Professor and Admin says feminists have ‘every right’ to ‘hate men

In a Washington Post op-ed, women and gender studies professor, Suzanna Danuta Walters, wrote that men should “step away” to make room for women, as they “have every right to hate you.”

The Northeastern University professor begins her article with the question: “Is it really so illogical to hate men?” 

“My edge has been crossed for a long time,” Walters writes, citing recent #MeToo allegations against high-profile men, rampant sexual assaults and “red pill men’s groups and rape camps.”  

“Seen in this indisputably true context, it seems logical to hate men,” Walters wrote, criticizing feminists who “don’t hate men.”

“Start with this,” Walters instructs men. “Lean out so we can actually just stand up without being beaten down. Pledge to vote for feminist women only. Don’t run for office. Don’t be in charge of anything. Step away from the power.”

“And please know that your crocodile tears won’t be wiped away by us anymore,” Walters admonishes. “We have every right to hate you. You have done us wrong. #BecausePatriarchy. It is long past time to play hard for Team Feminism. And win.”

Following Walters’ op-ed, a Title IX complaint was filed against her but Northeastern University opted not to conduct an investigation against the Women’s, Gender, and Sexuality Studies Department Chair.

Published:12/24/2018 2:53:40 PM
[Entertainment] Kevin Spacey Reprises House of Cards Role In Weird New Video Kevin SpaceyKevin Spacey is staging his own return to the White House. The actor shared a bizarre video of himself playing Frank Underwood on his personal YouTube account on Christmas Eve. In the...
Published:12/24/2018 2:22:49 PM
[Markets] Judge Orders North Korea To Pay $501 Million In Damages For Otto Warmbier's Death

In what will only be a symbolic victory over North Korea this Christmas Eve, U.S. District Judge Beryl Howell awarded the parents of Otto Warmbier a $500 million default judgmentagainst North Korea - amounting to roughly 0.8% of the country's GDP - for the death of their son. The judge also penned a scathing opinion to back up the decision, calling North Korea the “most advanced, most perfected totalitarian state in world history.”

She went on to write: “Moreover, North Korea is ‘unprecedented’ in its state sponsorship of ‘elicit [sic] activities, like proliferation of weapons of mass destruction, counterfeiting U.S. dollars, [and] the production and sale of drugs like opium, heroin, and meth[amphetamines]. Indeed, North Korea is the world’s ‘leading’ and ‘best qualified candidate for indictment’ at the International Criminal Court for crimes against humanity.”

She then slapped the country with the judgement, stating: “North Korea never entered an appearance in, or defended against, this action, and the plaintiffs now move for default judgment for the damage caused by North Korea to Otto and his parents. For the reasons discussed below, default judgment is granted and Otto and his parents are awarded damages totaling $501,134,683.80.”

The judge then took the time to unpack Warmbier's entire supposed "confession" that was made in North Korea:

Examples of the many untruths in the purported “confession” include: (1) Otto called his father’s company “Finishing Cincinnati Black Oxide,” but that company, in fact, is called “Finishing Technology”; (2) Otto said he practiced for his alleged crime by stealing street signs at the University of Virginia and storing the stolen signs under his bed, yet his father never found any such stolen signs, let alone under Otto’s bed at Otto’s apartment; (3) Otto said he conspired with the Friendship United Methodist Church, which had assets of $42 million, even though Otto had no relationship with that church, was not Methodist, and the church has no such extensive assets. Otto said he agreed to take the poster because he “‘desperately’ needed a car” and $200,000 to fund his two siblings’ college tuition, when Otto “had his own car and was never expected or asked to pay for his siblings’ tuition”; and Otto said he conspired with “the Z Society,” but had no connection to any such organization.

In addition to these false statements in his “confession,” Otto spoke with “unnatural” language that sounded as if he had “been forced to memorize” the words. Otto, for instance, said “I came to commit this crime task,” “[t]he United States administration already knows about my act through the CIA, which is closely linked to the Z Society and connived at my crime,” “[t]his was a very foolish aim,” “[t]his made an innocent-minded, adventurous young man, like myself, want to show my bravery to improve my reputation and show a Western victory of the DPR Korea,” and “I intentionally packed my quietest boots, the best for sneaking. I knew that I would wear them during my crime commitment.”

Otto’s “strange phrases,” such as the references to the “U.S. administration,” “DPR Korea instead of DPRK,” and his “quietest boots for sneaking” were “clumsy” North Korean “stock phrase[s]” that provide “no doubt . . . that this was a coerced confession under great duress.” Moreover, Otto’s reference to “hostile U.S. policy” three times, and the notion that Otto, as the oldest child, would need to subsidize his younger siblings’ college tuition—an expectation of the eldest son in Korean culture—are reflective of “Korean connotation,” further indicating North Korea “imposed” this material in Otto’s confession.

She ultimately concluded that North Korea was: "liable for the torture, hostage taking, and extrajudicial killing of Otto Warmbier, and the injuries to his mother and father, Fred and Cindy Warmbier."

The family which lives in Wyoming, Ohio, filed the lawsuit in federal court last April. North Korean authorities had arrested their son in January 2016 for attempting to steal a propaganda poster. He was later sentenced to 15 years in prison and subsequently died last year, days after he was released from North Korea to the United States in a coma. He had been tortured and in captivity in a North Korean labor camp for more than 17 months.

Recall, we wrote just days ago that the family was suing North Korea for $1.5 billion, or 2.5% of the country's total GDP.

You can read the entire judgement here:

Published:12/24/2018 2:22:48 PM
[Markets] 2 Year Treasury Yield Flash Crashes

If you thought the frenzied, panicked selloff into abysmal liquidity would end when the stock market plunged into the close, tumbling 2.71% and officially ending the longest bear market in history when the S&P dropped over 20% from its Sept 20 all time highs... you were wrong, because while stocks closed at 1pm, bonds are still open (until 2pm), and just after 1:24pm, the 2Y Treasury yield flash crashed (as prices Flash Smashed).

What caused this latest algo-driven market freakout? It certainly wasn't today's poor 2Y auction which saw the lowest bid-to-cover since December 2008.

The most likely culprit is what we discussed just yesterday when we noted that the short squeeze observed by Jeff Gundlach has yet to materialize, and not just at the long end, where net specs have never been shorter...

... but also the short end, where 2Y treasury net specs have rarely been shorter.

With stock markets in freefall, record low liquidity across all asset classes, and yields sliding all day, it was only a question of "max pain" before yet another big short was stopped out and threw in the towel, capitulating and covering their position at any price which appears to be precisely what happened with the 2Y Treasury.

Expect many more fireworks as more TSY shorts across the curve follow suit.

Published:12/24/2018 12:54:32 PM
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Published:12/24/2018 12:22:33 PM
[Markets] The Longest Bull Market In History Is Over - S&P Enters Bear Market

The S&P crashed below its bear market level of 2352.7 - the lowest since April 2017 - ending the longest bull market in history

This is the worst December for the S&P 500 since The Great Depression (and there are still a few more days left)...

Risk aversion is now extreme; even though the Street may point to a ‘less dovish’ FOMC and concerns about a U.S. government shutdown as possible reasons for the selloff, the apparent lack of positive drivers and headlines has curbed risk appetite,” Nomura strategist Masanari Takada wrote in a note.

“While sentiment looks to be skewed towards fear, most market participants seem to be looking for a plausible excuse to sell.”

Steve Mnuchin epicly failed to calm the market over the weekend...

As Michael O’Rourke, JonesTrading’s chief market strategist, said:

"...nothing says don’t panic like saying ‘I’m calling the plunge protection team tomorrow.' I honestly think that’s the type of event that’s going to startle markets and create more panic and fear when it’s meant to create confidence."

And sure enough, the plunge protection team's best efforts utterly failed to stem the tide...


A bloodbath...


As waves of selling hit the market... (very notable for such a normally quiet day - volume was almost double the recent average)


S&P volume set to be almost triple that of the past 9 pre-Christmas sessions




Bank stocks suffered...


And just the mention of the word 'liquidity' sent bank credit risk soaring...

Even the supposed safe-haven stocks were pummelled... The S&P 500 utilities index drops as much as 4.6% intraday, most since August 2011, amid the broader market rout and continued threat of higher interest rates in 2019.


And along with stocks, the dollar was dumped wholesale...


And credit markets were their widest since Brexit


Bonds were bid (with 30Y back below 3.00% intraday)...


And inflation breakevens were clubbed like a baby seal...


Yuan strengthened...


Cryptos soared since Friday, with Ethereum up 36% and Bitcoin back above $4,000...


Despite the dollar weakness, crude prices collapsed further as PMs rallied...


Gold soared (in dollars) on the day...


Breaking above its 200DMA...


And gold in yuan broke out of its channel...


WTI tumbled to almost a $43 handle...


Finally, since The Fed hiked rates and Powell didn't back down on auto-pilot, the S&P is down 8%, the dollar is down over 1%, and gold and the long bond are up around 1%...

And,@IvanOnTech provides a little context for just how bad this bloodbath is...

"This is not ICOs, this is NASDAQ % drop from ATHs. Scam? GOPRO -95% FIT -92% LC -91% SNAP -83% P -80% ZNGA -77% HIVE -73% TRUE -66% TWTR -63% SONO -60% DBX -57% Z -57% PS -50% FTCH -49% PSTG -48% SPOT -48% BOX -46% DOCU -45% SVMK -45% FB -42%"

And the odds of a rate hike in 2020 are now the same as the odds of rate-cut...


Published:12/24/2018 12:22:33 PM
[Entertainment] Jenni ''JWoww'' Farley ''Thankful'' 2-Year-Old Son Is Finally Speaking JWoww, Son, Greyson, InstagramJenni "Jwoww'' Farley has a lot to be grateful for this holiday season. The Jersey Shore star shared a video of her son Greyson's progress with learning to speak and...
Published:12/24/2018 11:53:03 AM
[Markets] Five Times Higher Ed. Cried "White Supremacy" In 2018

Authored by Celine Ryan via Campus Reform,

Campus Reform rounded up the top five instances of students and professors branding others "white supremacist" or teaching about the concept in class...

Institutions from Salisbury University in Maryland, all the way to California State University-Dominguez Hills have made the list.

1.  That time some conservative students tried to buy coffee in their MAGA hats

Students at Fordham University staged a protest against “white supremacy.”  The hour-and-a-half-long protest consisted of chants like “hate speech is not free speech” and signs reading “White Supremacy Kills."

“Fordham’s policies and protection of white supremacy is putting people at risk,” one student shouted into a megaphone. Another explained that the protest was meant to elicit a response from university administration. 

When asked to provide evidence of white supremacy on their campus, protesters recalled an incident to The Fordham Ram in which a student in charge of an on-campus coffee shop was disciplined for asking College Republicans to leave because of their Make America Great Again gear.

Protesters said showing up to the coffee house in Trump swag was “threatening behavior” and argued that Fordham’s actions constituted “protection of white supremacy.”

2.  The professor that went full #Resist in her course syllabus

California State University-Dominguez Hills professor Dr. Brooke Mascagni included in her course syllabus an explanation that President Donald Trump “won the 2016 election by appealing to hatred and bigotry."

The syllabus went on to blame the January government shutdown on Republicans.

"Moreover, the Republican Party controls the executive and legislative branches of government, yet couldn’t manage to keep the government running on the one year anniversary of Trump’s inauguration,” it said.

“And, oh yeah, Russia interfered with the U.S. electoral process and our president is under investigation for obstruction of justice,” Mascagni added.

"Future generations will wonder how the people of what was once considered the greatest democracy in the world elected a white supremacist, misogynist, narcissistic, volatile, belligerent, uninformed, stubborn, failed businessman and orange reality star to the highest office,” she wrote.

3. The 'White Supremacy' checklist

In case you aren’t sure whether or not you’re a white supremacist, a Linfield College English professor made a handy checklist to help you figure it out.

Reshmi Dutt-Ballerstadt published her checklist in a January Inside Higher Edop-ed meant to help individuals determine whether or not they were actively “supporting white supremacy.”

Transgressions on the list included working “in a position of power in a predominantly white institution” and not making an effort “to change the white supremacist power structures within your departments, committees and institutional decision-making process.”

A desire to suggest “‘stellar’ (mostly men) and obviously ‘white’” colleagues for promotions and recognition also helps to aid white supremacy, according to Dutt-Ballerstadt. This type of thinking lends itself to an unacceptable "logic of meritocracy that is built on this racist assumption that everyone has had the same access and opportunities.”

4.  The ‘white supremacy’ event held in response to Ben Shapiro’s campus visit

Jewish conservative commentator Ben Shapiro paid a visit to the University of Minnesota for a speaking engagement. The event spurred an ample amount of controversy on campus, as Shapiro’s speeches often do.

In response to this controversy, the university’s Women’s Center scheduled its own event titled “White Supremacy in the Age of Trump: An Anti-Racist Teach-In” directly before Shapiro’s speech. The event had the stated goal of “mapping the connections between white extremist groups and American conservatism today,” as well as "unpacking the ways white supremacy manifests itself in systems, language, and culture.”

“We do not know whether Ben Shapiro is a white supremacist,” organizers of the event told Campus Reform. “What we know is that we have received an outpouring of support.”

5.  The ‘Pyramid of White Supremacy'

Students at Maryland’s Salisbury University are required to take a course called “Diversity and the Self” in order to obtain an elementary education major.

This year, the course employed the use of a “Pyramid of White Supremacy,” which ranked different actions that, in theory, allow white supremacy to exist. The actions were placed in a hierarchy, with “indifference” on the bottom, all the way up to “genocide” at the top.

“In a pyramid, every brick depends upon the one below it for support,” a caption explained. “If the bricks at the bottom are removed, the whole structure comes tumbling down.”

Actions such as “remaining apolitical,” saying things like “politics doesn’t affect me,” and “avoiding confrontation with racist family members" were classified as indifference. The next level was titled “minimization,” and included things like speaking over people of color, or believing in a post-racial society.

Step by step, the pyramid increased in severity, from “veiled racism” such as the “bootstrap theory” of lifting oneself up by one’s own bootstraps, to “discrimination” such as “stop and frisk,” to “calls for violence” such as cross burning, until the analogy comes to a close with the “genocide” section. 

Salisbury students were quizzed on the pyramid, which implied that phrases such as “Why can’t we all just get along?” were complicit in supporting the mass murder of individuals based on race. 

“This class was extremely difficult to get through if you did not think like a liberal. Instead of teaching diversity, this class taught us that being white was a bad thing,” one student told Campus Reform. “We were told that we were only privileged because we are white and basically we did not actually work for what we have.”

Published:12/24/2018 11:53:03 AM
[Markets] What Will Cause The Next Recession?

Despite the widely-held view that consecutive quarters of GDP contraction are all that's required, recessions are defined ingloriously, and rather nebulously, by NBER as " a significant decline in economic activity spread across the economy, lasting more than a few months."

The committee places particular emphasis on two monthly measures of activity across the entire economy: (1) personal income less transfer payments, in real terms and (2) employment. In addition, we refer to two indicators with coverage primarily of manufacturing and goods: (3) industrial production and (4) the volume of sales of the manufacturing and wholesale-retail sectors adjusted for price changes. We also look at monthly estimates of real GDP such as those prepared by Macroeconomic Advisers.

However, recessions in real life are more like porn to the average joe; you know it when you see it (or experience it). And while growth, for now, remains positive - juiced by moar war spending, growing deficits, and tax cuts - it is slowing rather quickly (if judged by Atlanta Fed's guess)...

And even more so if judged by the market's best guess...

So - if a recession were jump out from behind a bush tomorrow, shocking all asunder at the potential lack of central bank omnipotence after all - who would be to blame?

Simple - as with all things today - it depends who you ask...

If you ask the Financial Press, the next US recession will be sparked by a financial crisis induced by Fed rate hikes...

Source: Goldman Sachs

However, if you ask the Twittersphere - bastion of clear thinking - it is Trump...

Source: Goldman Sachs

Even the President has used his Twitter influence to brag and cujole the markets...


But President Trump has made it clear who he thinks is responsible (and notably he was clear on who was responsible before the plunge started)...

Although the names Bernanke and Yellen are actually the real culprits for what is unwinding now.

Published:12/24/2018 11:22:43 AM
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Published:12/24/2018 10:55:01 AM
[Markets] This Key Indicator Spells Trouble For Oil Investors

Authored by Nick Cunningham via,

The price ratio between crude oil and natural gas has changed dramatically in the past few weeks, as crude prices have crashed at a time when natural gas prices hit multi-year highs. The ratio between the two prices could have consequences for a variety of natural gas and petrochemical projects, potentially leading to delays or cancellations.



Oil typically trades at a premium relative to natural gas, but at the end of November, the price ratio of Brent crude to Henry Hub gas fell to its lowest level since 2009.

“The relative price of oil and gas affects the economics of various infrastructure investments across the energy industry, and the recent falloff might act as a fly in the ointment to development plans in the short term and could lead to delays,” Barclays said in a report.

The reasons for the plunge in oil prices have been discussed at length in this column and elsewhere – demand looks shaky, U.S. supply is soaring and oil traders are skeptical about the ability and willingness of OPEC+ to balance the market.

Meanwhile, natural gas has gone in the opposite direction over the past two months or so. Low inventories, high demand and seasonal factors have dramatically tightened the market for natural gas in the United States. Prices hit $4.70/MMBtu in November, up 60 percent since September.

In other words, Brent has lost more than half of its price premium to Henry Hub in the last few months.

(Click to enlarge)

There could be fallout for proposed LNG projects because of this development. The fall of global crude prices has also dragged down global LNG prices (LNG prices are still influenced by crude benchmarks). So, we have falling LNG prices around the world, but rising natural gas prices in the United States. The business case for exporting LNG from the U.S. has always been about taking advantage of a cheap feedstock, and selling it abroad at a higher price.

With costs for the feedstock rising, and the landing price falling, the economics of building new LNG projects in the U.S. have taking a hit. January NYMEX gas prices are trading $4/MMBtu below Asian contract LNG prices, a differential that was as high as $9/MMBtu this past summer. The window for profits on shipping LNG from the U.S. to Asia has not entirely closed, but the business case looks a lot less compelling.

That isn’t a big deal for LNG export terminals already online, but it could cause developers of new projects to think twice. “Recent history suggests that the contraction in the oil-gas ratio could lead to project delays, particularly for those projects that are further behind in the process,” Barclays notes.

However, there are several reasons why this could merely be a temporary problem.

First, the oil-to-gas pricing ratio could rebound.

“[W]e believe this oil-gas ratio is due for a retracement, as we see the price movements in oil and gas as overdone,” Barclays said.

The investment bank sees the Brent-Henry Hub ratio doubling from around 15 times to 27-28 times by the second quarter of 2019. The OPEC+ cuts should help rescue oil prices to some degree, while record-setting natural gas production should replenish inventories after the winter season and push prices back down. Barclays sees Brent rising to $75 per barrel in the second quarter of 2019 while gas could fall back to as low as $2.67/MMBtu, allowing oil to regain its strong premium over gas.

A second reason why the lower oil-to-gas pricing ratio may not deter LNG investment is that most LNG developers look at futures prices several years out, and the futures curve for oil-to-gas several years from now still looks convincing, even as the near-term differentials have deteriorated. As such, developers may been unbowed as they plan new projects.

Nevertheless, the sudden downturn in project economics could still force some delayed decisions.

“Although we believe the Brent-Henry Hub will revert in the coming months, the current downturn represents a potential headwind to those US LNG export projects looking to reach final investment decision (FID) over the next year and become one of the ‘second wave’ of LNG terminals,” Barclays concluded.

To top it off, the U.S.-China trade war may magnify uncertainties. China is set to be the largest source of LNG demand growth going forward, so “long-term supply contracts from Chinese offtakers will be critical to underwriting financing for second wave US LNG projects,” Barclays says. China has already slapped a 10 percent tariff on American LNG, a levy that could rise to 25 percent if the two sides can’t come to an agreement by March.

There are several dozen LNG projects planned in North America, totaling $275 billion in potential investment, according to Barclays’ calculations. Obviously, not all – or even most – of those projects will move forward. But the suddenly weak oil-to-gas pricing ratio, combined with the U.S.-China trade war, acts as “an additional hindrance to development,” the investment bank concludes.

Published:12/24/2018 10:22:37 AM
[Markets] Netanyahu Dissolves Israeli Parliament, Calls For New Elections In Risky Political Gambit

Israeli Prime Minister Benjamin Netanyahu has somehow retained his popularity with the Israeli electorate despite the fact that he and his wife Sarah Netanyahu (who was indicted back in June) have been implicated in several corruption and bribery scandals. If prosecutors accept the advice of Israeli police, the prime minister could face criminal charges in the new year.

But none of this has apparently deterred Netanyahu from a risky political gambit: On Monday, Netanyahu and the leaders of Israel's coalition government formally dissolved the Knesset (Israel's parliament) and hold early elections as soon as April in order to try and win a broader majority that will allow them to pass a controversial military conscription reform bill that has alienated some far-right members of Netanyahu's coalition. The Knesset is expected to approve the dissolution during a Wednesday vote.

According to the Washington Post, which cited local media reports, the election will likely take place on April 9. During the vote, Netanyahu is hoping to expand his coalition's razor-thin one-vote majority in the legislative body (various member parties control 61 of 120 votes), which would (in theory) allow him to pass a bill aimed at making it easier to draft ultra-orthodox Israeli's into the Israeli Defense Force, which has been struggling in recent years with a shortage of man power.


As it stands, all Israelis must serve at least two years in the IDF. But most ultra-othodox jews who study in the country's Yeshivas have been exempted from this rule. The new law, if passed, would mandate service from all ultra-orthodox men except the very best scholars.

Netanyahu publicized his decision in a tweet:

Likud's governing coalition has been struggling since the Nov. 14 resignation of Defense Minister Avigdor Liberman, who stepped down over the government's handling of demonstrations  along the border between Israeli territory and the Gaza Strip.

Making the situation worse for Likud, after Liberman’s resignation, ultranationalist Education Minister Naftali Bennett threatened to withdraw his Jewish Home party from the governing coalition if Netanyahu didn't allow him to take over defense duties. Instead, Netanyahu said he was determined to add the defense minister post to his responsibilities (the prime minister also occupies the roles of foreign minister, immigration minister and health minister), forcing Naftali to backtrack.

But the final straw that lead to the vote appeared to be an earlier announcement from opposition leader Yair Lapid, leader of the centrist Yesh Atid party, who said his party would not support the conscription reform bill.

Drafting a law that all of Netanyahu's coalition members would support has proven impossible, so without a stronger majority, or a popular mandate to force more support from the opposition, the bill would have little chance of passing. Centrist critics have accused Netanyahu of not going far enough with the bill and "surrendering to the orthodox", while the orthodox oppose all efforts to extend conscription to their community.

Netanyahu remains very popular in Israel, and has vowed to stay on and fight any criminal charges that might arise. According to Reuters, recent polls show he has a good chance of winning the votes he needs to strengthen his position. But if he falters, he could face a challenge from the center as well as from his right. No one in the Likud Party has said they would challenge Netanyahu, and he's expected to retain his position as prime minister barring a major upset.

Published:12/24/2018 9:51:13 AM
[Markets] Less Than 1% From A Bear Market

The longest bull market in history - as measured by the S&P 500 - is now less than 1% from ending, with the drawdown from the Sept 21 highs now just above 19%...2352.7 is the magic number.

Of course, The Russell 2000 (-27%), Nasdaq (-22%), and Transports (-25%) are already deep in bear market territory.

And for the year, it's a bloodbath...

Expect more tweets from the administration once the S&P officially drops 20%, and more speculation that Powell's tenure is about to end.

Published:12/24/2018 9:22:54 AM
[Politics] Daily Presidential Tracking Poll

The Rasmussen Reports daily Presidential Tracking Poll for Monday 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 Trump is performing and 44% who Strongly Disapprove. This gives him a Presidential Approval Index rating of -11. (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 .

Starting Thursday (Dec 27) & continuing through New Year's week, Rasmussen Reports’ exclusive subscriber data level - Platinum - will be open to everyone. See the detailed data behind all of our polls. Stay tuned for more information!

Published:12/24/2018 8:51:59 AM
[Markets] Kyle Bass Was Right: The Administration Did Speak To The Nation About The Market... And It Only Made Things Worse

On Friday, in a since-deleted tweet, Heyman Capital's Kyle Bass made a correct prediction, saying that "the administration will likely speak to the nation about stock market over the weekend."

Unfortunately for bulls, said intervention by Treasury Secretary Mnuchin, in which he called the heads of the 6 biggest banks (JP Morgan, Bank of America, Goldman Sachs, Morgan Stanley, Wells Fargo and Citigroup) from his Cabo vacation, to discuss recent market turmoil and assure liquidity conditions, and noting that he would convene the President's Working Group on financial markets - a panel created in the aftermath of the Crash of 1987 - also known as the Plunge Protection Team, yielded the opposite outcome of that desired, with the S&P sliding further on Monday and now less than 2% away from a bear market.

Commenting to Bloomberg, Michael O’Rourke, JonesTrading’s chief market strategist said "nothing says don’t panic like saying ‘I’m calling the plunge protection team tomorrow.' I honestly think that’s the type of event that’s going to startle markets and create more panic and fear when it’s meant to create confidence."

Others were just as harsh: "We saw a lot of sell-offs in 2011, 2015-2016, and I don’t remember the presidents trying to convene the bank heads," said Michael Antonelli, equity sales trader at Robert W. Baird. “I’m worried the White House is going to make a mistake by exacerbating the market concern. Trump needs a political win, a PR that looks like he’s on top of the situation, and that’s what the weekend strikes me as."

"Personally I take it as a huge negative,” said Titus Wealth Management managing director Scot Lance. "He’s calling bank CEOs asking about their liquidity. That doesn’t make me feel all warm and fuzzy. The bottom line is there’s a crisis going on right now and it was born I believe as a political crisis exclusively last February in a trade war. That’s turned into an economic crisis."

Not everyone was pessimistic, however. "To me as a trader, that’s ruled out some tail risk," said Ilya Feygin, senior strategist at WallachBeth Capital. "That’s better than nothing. They’re not going to say that banks are fine this week and announce that the banks are bust next week. Whether he’ll be able to appease the markets, we don’t know, but it’s very likely that the banks will rally tomorrow. What else can you do in a situation like this? What he did was creative and clever."

Finally, keep in mind the conclusion of Bass' tweet: "Despite their differences over the wall, budget, and international relations, [the administration] will do the right things for investors who have lost a large percentage of savings this year."

So far his forecast is only half correct.