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[Markets] NATO Secretary General Targets "Rising China": Why Cold War Newspeak Never Went Away NATO Secretary General Targets "Rising China": Why Cold War Newspeak Never Went Away

Authored by  Cynthia Chung via The Strategic Culture Foundation,

On December 3rd, NATO Secretary General Jens Stoltenberg announced that NATO must address the “security implications” of China’s rise as a “military power”, and in true Orwellian doublespeak, insisted that he did not want to make an adversary out of Beijing but rather was interested in analysing how best to respond to the challenges China poses in a balanced way…by announcing it a ‘security threat’.

What are these challenges? That China now has the second largest defense budget in the world and has modern capabilities such as long-range missiles that can reach the whole of Europe and the U.S. This alone is apparently enough cause for Stoltenberg to announce publicly that NATO must address this as a challenge to western ‘security’ rather than actually engaging in diplomatic talks with China in order to resolve their concern in the matter like civilised people do. Let’s not forget that the American navy has been actively expanding their presence around China for several years now, yet despite this transparent hostility, it is China who is deemed a ‘security threat’ for having a competent defense budget.

But we know this is not the whole story.

Of course no bully likes it when their victim suddenly learns the art of self-defense, and who would be more paranoid of aggression than those who have been practising it for years on others only to increasingly find the tables turned.

This western paranoia of the communist boogeyman has its roots in Churchill’s Iron Curtain speech which ushered in the Cold War.

Last month was the 30th anniversary of the fall of the Berlin Wall, and along with its celebration the continuation of a false narrative, not only as to what had instigated the Cold War, but more importantly what the world was promised and ultimately denied when they were told that the Cold War was supposedly finally over.

In a recently published paper, On Churchill’s ‘Sinews of Peace’, I went over the drastic shift in geopolitics that occurred with the passing of Franklin D. Roosevelt who had upheld, along with his vice-president Henry Wallace, an anti-colonial post-WW II vision known as “The Century of the Common Man”. Churchill was very much dependant on American support to destroy the Frankenstein monster that the Bank of England had helped fund into significance and though Churchill loathed FDR’s vision, he was not in a position where he could outright resist it and instead found himself needing to make large compromises and often, most likely with the thought that this would all be temporary…and so it was.

Upon the death of FDR in 1945, the Iron Curtain speech shortly after created an oppressive division throughout the world, the effects of which we are still reeling from.

The Cold War division

Germany was officially divided according to this map by the Soviet Union, the UK, USA and France from 1945 to 1949. This was done to ensure that Germany would not attempt any further military action after WWII. It was Churchill’s Iron Curtain announcement in 1946 that turned the USSR into the free world’s public enemy #1, without any specific reason as to what the Soviets had done to warrant this declaration of the ‘Cold War’ division. This split with the Soviets was formalised in May 1949 when the British, French and American zones were joined to form the Federal Republic of Germany. The Soviets had no choice but to form a separate German republic in October 1949; the German Democratic Republic.

Despite these two German republics being set up, the British, French and American militaries would remain in West Germany until May 5, 1955, and ended their nearly 10 year occupation only after West Germany had joined NATO in 1954. Under these terms, West Germany would be allowed to establish a military force of up to half-million men and resume the manufacture of arms. The end of the Allied occupation of West Germany meant a full recognition of the republic as a member of the western alliance against the Soviet Union.

It should be evident that such manoeuvres were a clear show towards the USSR of not only a hostile stance but an ever increasing aggressive military doctrine that was preparing for a war.

Although West Germany was given ‘independence’ on a short leash, Allied presence never left West Berlin up until at least 1990. Berlin, as the capitol of Germany, held great strategic significance and became a form of battleground in intelligence gathering and espionage. Berlin had been split in two after WWII, and the Allied occupied West Berlin not only became a symbol of ‘freedom’ in response to the ‘tyranny’ of the Soviets, but was an important stronghold to keep in the Cold War, since it was in the middle of Soviet-held territory.

The blockade of roads and rail lines into West Germany by the Soviets in 1948-1949 and the later building of the Berlin Wall in 1961 were terrible decisions made by the USSR but should be measured in the context that such reactions were primarily instigated by an escalating western military aggression against them.

West Berlin would be surrounded by a wall that stretched out to 140 km, was 11.8 ft high, was for the most part electrified and had over 116 watchtowers and over 14, 000 guards and dogs. It would divide Berlin for 28 years.

This was indeed a very terrible period not only for those in Berlin but for much of the world. The Cold War thinking had allowed for the justification of the Spanish Inquisition-like Red Scare that occurred in the United States and elsewhere, where Americans who refused to follow the very narrow line of what was deemed acceptable thoughts and opinions in the free world newspeak could at any point in time face a judicial inquisition on them, akin to having committed a thoughtcrime.

Schools and workplaces were put through drills on a regular basis of how to react if the Soviets were to launch a nuclear bomb against America. Such tactics were used to put the American people in an ongoing fear state and thus quickly, the former allies who had by far the largest death toll in WWII in their essential role in combating fascism, were turned into a terrifying race of boogeymen with seemingly no sense of ‘humanity’ or ‘morality’.

As a quick side note, I want to bring attention to Elbe Day April 25, 1945, which marked the day when the American and Soviet forces met for the first time near the end of the war. There was a very strong comradery that occurred, and these men would become forever united since they experienced together the brutality and hardship of a hard won war.

It is also important to note that the Russians and Americans never had any historical conflict with each other at this point. In fact, Russia’s navy would place itself along both east and west coastlines of the United States during its Civil War to protect Lincoln’s Union from foreign intervention- that is, from Britain and France. The Russian navy were treated as heroes during their seven month stay in the US

Therefore, American and Russian soldiers had always been comrades in arms up until the point of the Iron Curtain speech by Churchill, upon which a division would be forcefully imposed between the two.

China’s invisible role

China’s involvement in both WWI and WWII is too often forgotten today. What is also forgotten is that the Iron Curtain was also directed against their country, and the level of extreme betrayal that occurred against them was on par with that suffered by the Soviet Union. Recall that under FDR’s post-war vision, both Russia and China were intended to be equal partners alongside the USA and Britain in shaping a multi-polar world order.

When WWI had started, China offered their support militarily to the cause of the Allies. Japan had already become a member of the Allied force and it was recognised that their relationship with China was not on ‘friendly’ terms, especially since the First Sino-Japanese War in 1895. China’s loss in this war allowed for a series of treatises that divided chunks of China amongst several nations. One particular region that China very much wanted back was Shandong, which was considered sacred land for the Chinese people since it was not only Confucius’ birthplace but also home to the ancient state of Qin, the last kingdom conquered by Qin Shi Huang, who proclaimed himself China’s first emperor in 219 B.C. Japan was at the time in possession of this region.

Japan was asked whether China could be ‘permitted’ to contribute military support for the Allied cause, to which Japan refused since this would give China a more equal footing with its relations to the West. Despite this refusal, China offered to support the Allies as laborers. Starting in 1916, China began shipping thousands of men to Britain, France and Russia who would work to repair tanks, assemble shells, transport supplies and munitions. Since China was officially neutral, commercial businesses were formed to provide the labor.

After a year of supplying labor, the Chinese contribution remained largely unrecognised diplomatically. By the end of the war, Chinese workers would rank as the largest and longest-serving non-European contingent in WWI.

By the end of the war, western powers ultimately awarded the Shandong territory to Japan in the Treaty of Versailles. China was understandably upset and refused to sign the treaty. The Versailles Treaty became a clear sign to the Chinese that they could not trust the European nations to support China’s welfare and that China would have to look elsewhere for support moving forward. [America did eventually intervene on this decision and awarded the territory to China in 1922.]

Another blow would be China’s earning of only two seats at the Paris Peace Conference, relative to Japan’s five seats, the reason why China had fewer seats was because they did not play a military role in the war- a role they were forbidden to play.

When WWII started and Japan had taken the side of fascism, China contributed its military forces on the side of the Allies. China had the second highest death toll in WWII after the Soviet Union. However, if you look more closely at the graph depicted above, the number of civilian deaths is much higher than military deaths (by about 12 million). This is because the Japanese fascists committed genocide on the Chinese people. The most notorious being the Nanking massacre which not only had a gruesomely large death toll but became infamous for its horrific torture and mass rape on the Chinese people. During this ethnic cleanse by the Japanese fascists throughout the entire WWII (which overlapped the second Sino-Japanese war), mass graves were dug out and millions of Chinese people would be told to step inside before they were shot to death. The Jewish holocaust is recognised as one of the worst crimes against humanity in recent history. However, not much is given to the memory of the mass genocide that was committed on the Chinese people during the same period.

Despite their great sacrifices, both the USSR and China would be labeled less than a year after the war as the new face of anarchy and barbarism, not by their actions but simply because Churchill and the British Empire had decided it so.

The empty promises of a post-Cold War world

On November 9th, 1989 the Berlin Wall fell and the end of the Cold War quickly followed… or at least this is what we are told.

The USSR agreed to the destruction of the Berlin Wall specifically on the basis that the western powers would agree to dismantle the war drive and that NATO would cease to expand its military bases any further. Many of the terms of these agreements were outlined in the Treaty on Conventional Armed Forces in Europe. However, this treaty that promised the dissolution of the Cold War paradigm was ultimately breached by NATO, with Russia suspending its participation in 2007 and in 2015 ultimately removing its participation in the treaty since NATO had no intention to honor it. Since the supposed end of the Cold War, NATO has only continued its expansion, increasing tension towards an ultimate conflict with Russia.

In 2007, President Putin gave a now famous speech at the Munich Security Conference. In this speech he discussed the fallacy of a unipolar world order envisioned by NATO and that there can only exist a multipolar world at this stage in history:

This universal, indivisible character of security is expressed as the basic principle that “security for one is security for all”. As Franklin D. Roosevelt said during the first few days that the Second World War was breaking out: “When peace has been broken anywhere, the peace of all countries everywhere is in danger.”

I consider that the unipolar model is not only unacceptable but also impossible in today’s world. And this is not only because if there was individual leadership in today’s – and precisely in today’s – world, then the military, political and economic resources would not suffice. What is even more important is that the model itself is flawed because at its basis there is and can be no moral foundations for modern civilisation.”

Where are we now?

We need to grow up, and grow up fast. We cannot afford to be led by childish stories of the boogeyman and be governed by fear so easily any longer.

It is time we, the West, recognise our faults and hypocrisy. The western hegemony over the world is coming to an end and we should be happy for our brothers and sisters who have a renewed hope for a better life, largely from the New Silk Road. We have no place to condemn their rise as a threat to western stability. Western powers have been guilty of breaching trust with the Russians and Chinese time after time. We need to correct this monstrous inability to be able to trust and love those outside the western sphere. These cultures, some which may have been considered by us backwards not that long ago, have grown and cultivated themselves such that we today look very small next to them. We have become the backwards culture. We have become the barbaric culture that only knows war and is a disbeliever in peace. We who are privileged enough to never have experienced war in our homelands for almost a century, are the ones who condone it as necessary on others. What an ugly belief this is. It is time the West, and its people, have the humility to admit that they have something to learn from the rest of the world. Only then can there be a true dialogue amongst civilisations towards the common goal of peace.

Tyler Durden Wed, 12/11/2019 - 23:45
Published:12/11/2019 11:15:50 PM
[Markets] Hashrate Domination: China Controls Two-Thirds Of The World's Crypto Network's Processing Power Hashrate Domination: China Controls Two-Thirds Of The World's Crypto Network's Processing Power

A new report from Reuters, citing CoinShares, indicates that China's Bitcoin miners now control a whopping 66% of the world's crypto network's processing power. This could be bad news for US miners as it signals China is quickly advancing.

Also known as "hashrate," it's the speed at which a computer is performing an operation in Bitcoin code to unlock coins, China has been steadily gaining hashrate share this year.

In June, China's Bitcoin miners controlled 60% of the global hashrate, and now the figure is up to 66% in December.

Chris Bendkisen, head of research at CoinShares, believes the rapid increase in the Chinese share of hashrate could be due to the deployment of advanced mining technology.

"This is beneficial to the Chinese mining industry," said Bendiksen. "If you are the first to increase your proportion of the hashrate, and you can do that before your competitors, that's generally good."

Mining crypto has become more difficult over the last several years as profitability sags. The overall Bitcoin hashrate has risen 80% since June, which in recent times, has created stronger profitability for miners who have access to cheap energy.

With China controlling more and more of the world's Bitcoin hashrate, some worry that the US could be falling behind the crypto curve, as Beijing is making a state effort to be a leader in blockchain.

Xiao Wunan, an executive vice-chairman of the China-backed Asia Pacific Exchange and Co-operation Foundation (APECF), recently told CNBC that Beijing's crypto initiatives are strategically important to the communist party.

"Blockchain is the technology field that China started to develop almost at the same time as other countries in the world," said Xiao, who was employed by the Chinese government. "It's hard for China to claim technological supremacy on fields like Internet Plus [China's initiative on information technology] or artificial intelligence, but the blockchain technology would be a perfect fit for China's technological dominance."

"It's called 'corner overtaking' strategy in Chinese," Xiao added.

The largest mining facilities in China are in Yunnan and Sichuan provinces, CoinShares said, which account for at least half the world's hashrate.

Other top mining hubs are in the US, Russia, and Kazakhstan.

China could be laying the groundwork for a state-backed digital currency in the mid-2020s as it wants to become a leader in crypto in the intermediate timeframe.

So what's next for Bitcoin? 

Tyler Durden Wed, 12/11/2019 - 23:25
Published:12/11/2019 10:45:04 PM
[Markets] Most Asian markets higher after Fed signals it will hold the line on interest rates Gains in Japan and Hong Kong led an otherwise mixed early Asian stock session Thursday after the U.S. Federal Reserve signaled it will likely keep interest rates on hold throughout 2020 amid a solid economy. Published:12/11/2019 10:45:04 PM
[Markets] Asia Markets: Most Asian markets higher after Fed signals it will hold the line on interest rates Gains in Japan and Hong Kong led an otherwise mixed early Asian stock session Thursday after the U.S. Federal Reserve signaled it will likely keep interest rates on hold throughout 2020 amid a solid economy.
Published:12/11/2019 10:45:03 PM
[Markets] SoCal Church Displays Holy Family As "Caged Refugees" At The Border SoCal Church Displays Holy Family As "Caged Refugees" At The Border

Authored by Eoin Higgins via CommonDreams.org,

A Nativity scene in the southern California city of Claremont depicting the Holy Family as a separated family held in cages at the U.S. border is sparking controversy and conversations over President Donald Trump’s immigration policies.

“If this isn’t your church’s politics, you’ve got the wrong faith,” tweeted music journalist Zel McCarthy.

Vanity Fair writer Anthony Breznican said that the Claremont United Methodist Church tableau, depicting Joseph and Mary in cages on either side of a caged baby Jesus Christ, was an accurate representation of the meaning of the Bible story.

“I love the Nativity story,” said Breznican.

“I love it not because it is warm and fuzzy, but because it is about perseverance against cruelty.”

Breznican added that the Nativity story points the finger at those who, when faced with evil, do nothing.

“The monster of the Nativity story is not King Herod, the bloodthirsty tyrant,” said Breznican. “He is just the backdrop.”

“The villain is the innkeeper, a common everyday person, who sees their dire situation and chooses not to help,” Breznican continued.

“No room. Sorry. America is full of innkeepers these days.”

The exhibit represents “a not-so implicit criticism of the Trump administration’s border separation policies,” said Politico reporter Dan Goldberg.

Claremont United Methodist Church Rev. Karen Clark Ristine told L.A. Times reporter James Queally that the scene was intended to use the Holy Family to highlight the “nameless families” who are victims of the border crackdown.

“We’ve heard of their plight; we’ve seen how these asylum seekers have been greeted and treated,” said Ristine.

“We wanted the Holy Family to stand in for those nameless people because they also were refugees.”

“We don’t see it as political; we see it as theological,” she added.

Ristine’s sharing of a photo of the scene on Facebook sparked controversy, with some commenters calling the pastor “an instigator; a trouble maker who does not have this country’s best interests,” and questioning the purpose of the scene.

In her post, Ristine said that the Nativity scene was meant to send a message.

“Imagine Joseph and Mary separated at the border and Jesus no older than two taken from his mother and placed behind the fences of a Border Patrol detention center as more than 5,500 children have been the past three years,” wrote Ristine. “Jesus grew up to teach us kindness and mercy and a radical welcome of all people.”

Tyler Durden Wed, 12/11/2019 - 23:05
Published:12/11/2019 10:21:05 PM
[Markets] The Warfare State Lied About Afghanistan, Iraq, & Syria. They Will Lie Again! The Warfare State Lied About Afghanistan, Iraq, & Syria. They Will Lie Again!

Authored by Tho Bishop via The Mises Institute,

This week saw the Washington Post published a bombshell report titled “The Afghanistan Papers,” highlighting the degree to which the American government lied to the public about the ongoing status of the war in Afghanistan. Within the thousands of pages, consisting of internal documents, interviews, and other never-before-released intel, is a vivid depiction of a Pentagon painfully aware of the need to keep from the public the true state of the conflict and the doubts, confusion, and desperation of decision-makers spanning almost 20 years of battle.

As the report states:

The interviews, through an extensive array of voices, bring into sharp relief the core failings of the war that war is inseparable from propaganda, lies, hatred, impoverishment, cultural degradation, and moral corruption. It is the most horrific outcome of the moral and political legitimacy people are taught to grant the state. persist to this day. They underscore how three presidents — George W. Bush, Barack Obama and Donald Trump — and their military commanders have been unable to deliver on their promises to prevail in Afghanistan.

With most speaking on the assumption that their remarks would not become public, U.S. officials acknowledged that their warfighting strategies were fatally flawed and that Washington wasted enormous sums of money trying to remake Afghanistan into a modern nation....

The documents also contradict a long chorus of public statements from U.S. presidents, military commanders and diplomats who assured Americans year after year that they were making progress in Afghanistan and the war was worth fighting.

None of these conclusions surprise anyone that has been following America’s fool's errand in Afghanistan. 

What makes this release noteworthy is the degree to which it shows the lengths to which Washington to knowingly deceive the public about the state of the conflict. This deception extends even to the federal government’s accounting practices. Notes the report, the “U.S. government has not carried out a comprehensive accounting of how much it has spent on the war in Afghanistan.”

As the war has dragged on, the struggle to justify America’s military presence accelerated. As the report notes:

A person identified only as a senior National Security Council official said there was constant pressure from the Obama White House and Pentagon to produce figures to show the troop surge of 2009 to 2011 was working, despite hard evidence to the contrary.

It was impossible to create good metrics. We tried using troop numbers trained, violence levels, control of territory and none of it painted an accurate picture,” the senior NSC official told government interviewers in 2016. “The metrics were always manipulated for the duration of the war.

Making Washington’s failure in Afghanistan all the more horrific is how easily predictable it was for those who desired to see the warfare state for what it is.

In the words of Lew Rockwell, in reflecting on the anti-war legacy of Murray Rothbard:

War is inseparable from propaganda, lies, hatred, impoverishment, cultural degradation, and moral corruption. It is the most horrific outcome of the moral and political legitimacy people are taught to grant the state. 

On this note, it is important to note that the significance of the Washington Post’s report should not distract from another major story that has largely been ignored by mainstream news outlets.

Recently, multiple inspectors with the Organisation for the Prohibition of Chemical Weapons have come forward claiming that relevant evidence related to their analysis of the reported 2017 chemical gas attack in Syria. As Counterpunch.org has reported:

Assessing the damage to the cylinder casings and to the roofs, the inspectors considered the hypothesis that the cylinders had been dropped from Syrian government helicopters, as the rebels claimed. All but one member of the team concurred with Henderson in concluding that there was a higher probability that the cylinders had been placed manually. Henderson did not go so far as to suggest that opposition activists on the ground had staged the incident, but this inference could be drawn. Nevertheless Henderson’s findings were not mentioned in the published OPCW report.

The staging scenario has long been promoted by the Syrian government and its Russian protectors, though without producing evidence. By contrast Henderson and the new whistleblower appear to be completely non-political scientists who worked for the OPCW for many years and would not have been sent to Douma if they had strong political views. They feel dismayed that professional conclusions have been set aside so as to favour the agenda of certain states.

At the time, those who dared question the official narrative about the attack - including Rep. Tulsi Gabbard, Rep. Thomas Massie, and Fox News’s Tucker Carlson - were derided for being conspiracy theorists by many of the same Serious People who not only bought the Pentagon’s lies about Afghanistan but also the justifications for the Iraq War.  

Once again we are reminded of the wise words of George Orwell, “truth is treason in an empire of lies."

These attacks promoted as justification for America to escalate its military engagement in the country, with the beltway consensus lobbying President Trump to reverse his administration's policy of pivoting away from the Obama-era mission of toppling the Assad regime. While Trump did respond with a limited missile attack, the administration rejected the more militant proposals promoted by some of its more hawkish voices, such as then-UN Ambassador Nikki Haley. 

In a better timeline, the ability of someone like Rep. Gabbard to see through what increasingly looks like another attempt to lie America into war would warrant increased support in her ongoing presidential campaign.

Instead, we are likely to continue to see those that advocate peace attacked by the bipartisan consensus that provides cover for continued, reckless military action abroad.

Tyler Durden Wed, 12/11/2019 - 22:25
Published:12/11/2019 9:45:09 PM
[Markets] Californians Flock To Texas As Corporations Seek Cheaper Pastures Californians Flock To Texas As Corporations Seek Cheaper Pastures

Around 700,000 people left California last year, with more than 10% moving to Texas.

According to a new report by Yardi Systems, over 86,000 people abandoned the Golden State. In terms new Texas residents overall, ex-Californians constituted around 15%, according to the Dallas Morning News.

The influx of Californians should come as no surprise, as businesses have been migrating out of the high-tax, high-crime, heavily regulated state for cheaper pastures.

Last month, we reported that Charles Schwab's relocation of their headquarters from San Francisco to Dallas, a move they expect to complete in the second half of 2020. Announced following the company's $26 billion acquisition of TD Ameritrade, their new 70-acre Dallas-Fort Worth campus will cost around $100 million, and provide 500,000 square-feet of office space.

Chairman and founder Charles Schwab noted that one of the drivers behind the move from California was that "the costs of doing business here are so much higher than some other place."

Schwab is far from alone, as some 660 companies have moved 765 facilities out of California over the last 24 months, according to a new report.

The departures from the Golden State between January 2018 and now involve corporate headquarters, manufacturing facilities, data centers, research hubs, software and engineering centers and a few warehouses, according to business relocation expert Joe Vranich, president of Spectrum Location Services.

Obviously a lot of them are going to Texas,” Vranich said in an interview with the Dallas Business Journal. “It just makes sense.”

California companies large, midsize and small are shifting their regional or corporate headquarters to North Texas because of the DFW area’s generally lower taxes, more affordable housing, lower expenses, central location, access to an international airport and other factors. -Dallas Business Journal

Meanwhile, the Wall Street Journal noted last month that " The Lone Star State imposes a 0.75% franchise tax on business margins (total revenue minus compensation), which is substantially less than the corporate tax rates in California (8.84%) and Nebraska (7.81%), where TD Ameritrade is currently headquartered. The city of San Francisco also imposes a 0.38% payroll tax and a 0.6% gross receipts tax on financial service companies."

One California law cited in the exodus requires companies to hire workers as employees, not independent contractors, with limited exceptions. Aimed at giving basic labor rights and benefits to hundreds of thousands if people working for Uber, Lyft, Doordash, and similar companies, the companies affected say it's not feasible.

"I don’t know how companies can continue to deal with this brutal assault that is on them," said Joe Vranch, adding "Most of the municipalities in Texas are easier to get along with, and that’s a benefit in addition to things like no income tax and an easier regulatory environment."

Tyler Durden Wed, 12/11/2019 - 22:05
Published:12/11/2019 9:13:06 PM
[Markets] "This Pattern Of Clumsy Manipulation Is Everywhere In The Record Of CrossFire Hurricane Probe" "This Pattern Of Clumsy Manipulation Is Everywhere In The Record Of CrossFire Hurricane Probe"

Authored by Charles "Sam" Faddis via AndMagazine.com,

The Hidden Hand

The essence of a coup, which some might refer to as covert action, is the hidden hand.  One does not announce that a foreign power is overthrowing the government and installing a new government.  One pulls strings as if from behind a curtain, making events that are all part of a carefully orchestrated plan appear disconnected, spontaneous and serendipitous.

As I read through the recently released IG report for the second time, as someone with a great deal of experience in military and intelligence matters, I see that hand everywhere.

Per the IG report, a single report is delivered to the FBI in the summer of 2016.  It concerns a meeting between a cooperative contact of a foreign intelligence service and a junior level employee of the Trump campaign, George Papadopoulos.  The report relates what are frankly very amorphous comments by Papadopoulos concerning the Russian government and its alleged possession of information on Hillary Clinton.

On any other day this report would command no attention whatsoever.  The source in question has no track record of any kind with the FBI. Papadopoulos has been employed by the Trump campaign for perhaps 90 days at this point, and there is no reason to believe he has contacts of significance in the Kremlin.

Not on this occasion.  This one report from a foreign intelligence service goes directly to the top of the FBI.  The Director himself, James Comey is briefed.  A full investigation is launched.  Multiple confidential human sources are tasked.  Wiretaps are ordered.  A task force is organized. Crossfire Hurricane is born.

There is a problem, though.  This hand, perhaps because it is controlled by individuals who have made their bones riding desks in Washington, DC and not in the field running actual operations, is clumsy.  The information regarding Papadopoulos provided the needed pretext to start an investigation, but most of the people who will now form the investigative team are not in on the plot.  They will have to be led to the pre-ordained conclusion, so that it appears that they did so without outside interference.

And these investigators have a pesky habit of actually doing their jobs.

Almost immediately these investigators demonstrate that Papadopoulos does not have the access within the Trump campaign necessary for the suspected Russian connections.  If there is a conduit, Papadopoulos cannot be it.

Suddenly, Carter Page is shoved forward as the new focus of the investigation.  His contacts with Russians are long-standing and well-known.  He will serve well as the new target.  Human sources are mobilized.  Wiretaps are ordered.

But, there is another problem.  Those wielding the clumsy hidden hand have forgotten the first rule of real operational personnel.  Never move against a target until you have run “traces.” until you have run the individual’s name through our databases, checked the records and found out what we already know about him.  Maybe the conspirators really don’t know that.  Maybe they just don’t dare do so, because it will mean involving working-level personnel who are not in on the joke.

In any event, they apparently did not run “traces” and as a consequence they clearly do not know that, yes, Mr. Page has extensive Russian contacts and, yes, he has been reporting to “another government agency” for many years on those contacts.  Page is a source.  Our source.

This is problem.  It is a huge, never fully resolved problem for the conspirators.  The “other government agency” sends a formal memo documenting the fact that Page is a source.  The hidden hand tries hiding that.  Any mention of it is removed from applications for FISA warrants, and it is never mentioned in renewal applications either.

But, again, as new FBI personnel, unwitting of the plot are assigned to the investigation they keep doing their jobs.  Already they have determined that the only evidence they can develop is exculpatory.  Already they have established that there is no basis to believe any of the allegations against Donald Trump and his campaign.  Now, they circle back to the issue of Page.

Are they, in effect, focusing investigative resources on a man, Page, who has been cooperating with American intelligence for years?  If so, this is the definition of “crossing lines.”  Inquiries are made.  A second memorandum is sent by the “other government agency.”  This one spells out in excruciating detail Page’s relationship with that agency.

The conspirators, behind their curtain, are now desperate.  What was supposed to be an elegant plot is now in danger of collapsing.  The hand directs crude measures.  An attorney assigned to the investigation materially alters the memorandum inserting words not found in the original and making it appear to say exactly the opposite of what it said, in plain English, originally.  The trail is covered, temporarily, but there is now hard, physical evidence of the conspirators intervention.  The “other government agency” retains the memorandum in its original form, waiting to be discovered by investigators scrutinizing the record at a later date.

This pattern of often clumsy manipulation of the Crossfire Hurricane investigation is everywhere in the record.  It is at the heart, for instance, of the entire Christopher Steele narrative.

Shortly after Crossfire Hurricane is initiated, Steele, a former British intelligence officer, appears to provide a dossier, actually multiple files, concerning alleged connections between Donald Trump and his campaign and the Kremlin.  The dossier also includes a number of gratuitously salacious allegations concerning President Trump and Russian prostitutes, which likely says more about Steele and the way his mind works than anything else.

Steele is working for a law firm employed by Fusion GPS, which is in effect, an extension of Hillary Clinton’s campaign.  He is in Washington, DC frequently.  He has a wide range of contacts at senior levels on multiple continents.  He has had contact of some kind with the FBI for years.

Yet, when Steele appears to deliver his information he chooses to pass that information to a junior FBI agent working for an FBI Legal Attache (Legatt) in a European city and then rely on this individual to get the “intelligence” to the right people.  Why?  Because in the minds of those individuals masterminding this operation this will make the information more “organic.”  It will not arrive on the desks of the special agents working Crossfire Hurricane as if hand delivered.  It will not appear to be too neatly packaged and perhaps arouse suspicion.  It will seem to the people working the investigation, most of whom of necessity can never know what is really happening, that this information was developed in the field and therefore is more credible and to be afforded more weight.

But, again, the hand is clumsy.  Steele is a loose cannon.  He talks to the press.  He discusses his contact with the FBI.  This is discovered.  Formal contact with Steele is shut down.  He is no longer an FBI source.

As with the alteration of the memo from the “other government agency” the conspirators must become more forceful and more visible.  If Steele’s “intelligence” cannot continue to be fed into the investigation there is no plot.  There is no way to lead the investigators in the desired direction and ensure the desired result.  The entire operation is in danger of collapsing.

Again, per the IG report, Bruce Ohr, a senior Department of Justice lawyer with no role of any kind in the investigation, but a wife who works for Fusion GPS, suddenly appears and makes himself a conduit between Steele and the FBI.  Beyond that, in fact, he meets directly with the head of Fusion GPS, Glenn Simpson, obtains at least one thumb drive full of Steele’s reports and ferries those to the FBI. The pipeline is reestablished.

No one in the Department of Justice or FBI has asked Ohr to play this role.  It is, in fact, in direct conflict with his status as an attorney.  Ohr actively hides his actions from his superiors.  His behavior is transparent and without justification.  It is almost certain to attract attention.  This is not all the way covert action should work, but the conspirators, backed into a corner by the FBI’s refusal to meet Steele directly have no choice.  It is the files compiled by Steele, which are the key to their efforts to delegitimize and destroy Donald Trump.

The IG report on the Crossfire Hurricane investigation runs to hundreds of pages, and it contains a wealth of information.  It is the product of what can only have been a massive amount of investigative work by a team of dedicated professionals and is a huge resource for those attempting to understand the origins of the Russian collusion hoax.  Yet, at the same time it misses the essence of what just transpired.  It is like reading a description of the actions and motivations of a troupe of marionettes in a stage play and missing the fact that they are all simply doing what those pulling the strings make them do.

The FBI did not conduct an investigation of Donald Trump and his associates that ultimately proved to be based on false information and continue that investigation long past the time it should have been shut down simply because some people made some errors in judgment or some procedures need to be changed.  That investigation was simply the most visible piece of a deliberate, covert attempt to overthrow the democratic process.  The perpetrators of that crime have yet to be brought to justice and identified. 

Let’s hope that happens soon.

Time for the hidden hand to be revealed.

Tyler Durden Wed, 12/11/2019 - 21:45
Tags
Published:12/11/2019 8:52:18 PM
[Markets] The Moneyist: ‘He took my jewelry and never saved a penny’ — how can I stop my husband from getting his hands on my IRA and bank accounts in our divorce? ‘I have a safety deposit box that he doesn’t know about.’
Published:12/11/2019 8:52:18 PM
[Markets] Costco Reports Earnings Tomorrow. Here’s What to Expect. Costco stock has had a good year. Shares are up about 45% year to date. Investors hope the strong performance will continue after the company reports earnings after the close of trading Thursday. Published:12/11/2019 8:14:11 PM
[Markets] Is It Garbage Or Is It Art? Is It Garbage Or Is It Art?

Authored by Ryan McMaken via The Mises Institute,

Artwork Made from Old Bananas Shows Value Is Subjective

Last week, Miami art gallery Art Basel sold, for $120,000, a piece of art composed of a banana duct taped to a wall. At least one other identical piece sold for a similar amount. A third piece was priced at $150,000. The banana used in the display is a real banana, and on Saturday, a performance artist named David Datuna ate some of it.

Datuna's stunt merely illustrated what everyone should have already known: the value of the artwork had almost nothing to do with the banana itself. Its value came not from the amount of labor that went into it or from the cost of the physical materials involved. A spokeswoman for the museum summed up the real source of the item's value, noting,He [Datuna] did not destroy the artwork. The banana is the idea.

In other words, the people who purchased the art weren't actually purchasing a banana and tape. The person who purchased the art was buying the opportunity to communicate to peers that he or she was rich enough to throw around $120,000 on a work of art that would soon cease to exist. This was a transaction that involved purchasing status in exchange for money. The banana was only a tiny part of the exchange.

Moreover, the transaction offered the opportunity for the gallery, the art seller, and the art buyer to all further increase their status by being the topic of discussion in countless news articles and discussions in social media. As was surely anticipated by the artists and everyone else in the banana sale, the media could be counted on to act as if this art was something new, outrageous, or exciting. "Art world gone mad," the New York Post announced on its front page. Hundreds of thousands of commentators in various social media forums chimed in to comment on the matter.

One wonders, however, how many times this shtick can be repeated over and over until people lose interest. Apparently: many times. After all, this sort of art is not a new thing. For decades, avant-garde artists have been using garbage and other found objects to create art. And people with a lot of disposable income have been willing to pay a lot of money for it. It's all basically an inside joke among rich people. And regular people have the same reaction over and over again.

But there's absolutely nothing at all that's shocking, confusing, or incomprehensible from the point of view of sound economics. Transactions like these should only surprise us if we're still in the thrall of faulty theories of value, such as the idea that goods and services are valued based on how much labor and materials went into them. That's not true of any good or service. And it's certainly not true of art.

Is It Garbage or Is It Art?

In fact, two identical items can be valued in two completely different ways simply if the context and description of the objects changes.

According to the Daily Maila 2016 study suggests that people value ordinary objects differently depending on what they are told about the objects:

"According to the new research, being told that something is art automatically changes our response to it, both on a neural and a behavioural level."

In this case, researchers in Rotterdam, the Netherlands, told subjects to rate how they valued objects in photographs. When told that those objects were "art" people valued them differently. 

In other words, the perceived value of objects could change without any additional labor being added to them, and without any physical changes at all. 

The value, it seems, is determined by the viewer, and we're reminded of Carl Menger's trailblazing observations about value

Value is a judgment economizing men make about the importance of the goods at their disposal for the maintenance of their lives and well-being. Hence value does not exist outside the consciousness of men.

One moment the viewer may think he's looking at garbage, which he has likely learned is of little value. When told that said junk is really "art," the entire situation changes. (Of course, we would need to see their preferences put into real action via economic exchange to know their preferences for sure.)

The change, as both Menger and Mises understood it, is brought about not by changes to the object itself, but by changes in context and in the subjective valuation of the viewer. 

A glass of water's value in a parched desert is different from that of a glass next to a clean river. Indeed, a glass of water displayed in a museum as art — as in the case of Michael Craig-Martin's "An Oak Tree" — is different from water found in both deserts and along rivers. Similarly, the value of a urinal displayed in a museum as art — as with Marcel Duchamp's "Fountain" — is different from a physically identical urinal in a restroom. 

The Daily Mail article attempts to tie the researchers' observations to the theories of Immanuel Kant on aesthetics. But, one need know nothing about aesthetics at all to see how this study simply shows us something about economic value: it is, to paraphrase Menger, found in the "consciousness of men." 

And it is largely due to this fact that centrally planning an economy is so impossible. How can a central planner account for enormous changes in perceived value based on little more than being told something is art? 

Is a glass of water best utilized on a shelf in a museum, or is it best used for drinking? Maybe water is best used for hydroelectric power? Exactly how much should be used for each purpose? 

When discussing the problems of economic calculation in socialism, Mises observed that without the price system, there simply is no way to say that a specific amount of water is best used for drinking instead of being used for modern-art displays. Nor is the fact that people need water for drinking the key to determining the value of water. (See the diamond-water paradox.)

In a functioning market, consumers will engage in exchanges involving water in a way that reflects how much they prefer each use of water to other uses. At some moments, some consumers may prefer to drink it. At other moments, they may prefer to water plants with it. At still other moments, they may want to contemplate an art display composed of little more than a glass of water. The price of water at each time and place will reflect these activities. 

Without these price signals, attempting to create a central plan for how each ounce of water should be used is an impossible task.

Do we need to know why people change their views of object when told they are art? We do not. Indeed, were he here, Mises would perhaps be among the first to remind us that economics need not tell us the mental processes that lead to people preferring different uses for different objects, although we can certainly hazard a guess. It's unlikely that the buyer of the taped banana bought it because he or she planned to eat it.

But even if we are wrong about the buyer's motivation, the fact remains that the buyer valued the banana at $120,000 for some reason — and the value was subjective to the buyer.

Similarly, we can't know for sure why each individual values water for drinking over "art water" or vice versa. And a government planner or regulator — it should be noted — can't know this either.

Tyler Durden Wed, 12/11/2019 - 21:05
Published:12/11/2019 8:14:11 PM
[Markets] GE Stock Is Rising Because One Analyst Finally Got Off the Fence UBS analyst Markus Mittermaier upgraded GE’s stock to the equivalent of Buy from Hold, taking his price target to $14 from $11.50, about 28% above recent levels. He calls 2020 an “inflection year” for the controversial conglomerate. Published:12/11/2019 7:42:28 PM
[Markets] Sin Taxes & Other Orwellian Methods Of Compliance That Feed The Government's Greed Sin Taxes & Other Orwellian Methods Of Compliance That Feed The Government's Greed

Authored by John Whitehead via The Rutherford Institute,

Of all tyrannies, a tyranny sincerely exercised for the good of its victim may be the most oppressive. It may be better to live under robber barons than under omnipotent moral busybodies. The robber baron’s cruelty may sometimes sleep, his cupidity may at some point be satiated, but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience.”

- C.S. Lewis

“Taxman,” the only song written by George Harrison to open one of the Beatles’ albums (it featured on the band’s 1966 Revolver album), is a snarling, biting, angry commentary on government greed and how little control “we the taxpayers” have over our lives and our money.

If you drive a car, I'll tax the street,

If you try to sit, I'll tax your seat.

If you get too cold I'll tax the heat,

If you take a walk, I'll tax your feet.

Don't ask me what I want it for

If you don't want to pay some more

'Cause I'm the taxman, yeah, I'm the taxman.

When the Beatles finally started earning enough money from their music to place them in the top tax bracket, they found the British government only-too-eager to levy a supertax on them of more than 90%.

Here in America, things aren’t much better.

More than two centuries after our ancestors went to war over their abused property rights, we’re once again being subjected to taxation without any real representation, all the while the government continues to do whatever it likes—levy taxes, rack up debt, spend outrageously and irresponsibly—with little concern for the plight of its citizens.

Because the government’s voracious appetite for money, power and domination has grown out of control, its agents have devised other means of funding its excesses and adding to its largesse through taxes disguised as fines, taxes disguised as fees, and taxes disguised as tolls, speeding tickets and penalties.

With every new tax, fine, fee and law adopted by our so-called representatives, the yoke around the neck of the average American seems to tighten just a little bit more.

Everywhere you go, everything you do, and every which way you look, we’re getting swindled, cheated, conned, robbed, raided, pickpocketed, mugged, deceived, defrauded, double-crossed and fleeced by governmental and corporate shareholders of the American police state out to make a profit at taxpayer expense.

We have no real say in how the government runs, or how our taxpayer funds are used, and no real property rights, but that doesn’t prevent the government from fleecing us at every turn.

Think about it.

Everything you own can be seized by the government under one pretext or another (civil asset forfeiture, unpaid taxes, eminent domain, so-called public interest, etc.).

That house you live in, the car you drive, the small (or not so small) acreage of land that has been passed down through your family or that you scrimped and saved to acquire, whatever money you manage to keep in your bank account after the government and its cronies have taken their first and second and third cut…none of it is safe from the government’s greedy grasp.

And then you have all of those high-handed, outrageously manipulative government programs sold to the public as a means of forcing compliance and discouraging unhealthy behavior by way of taxes, fines, fees and programs for the “better” good.

Surveillance cameras, government agents listening in on your phone calls, reading your emails and text messages and monitoring your spending, mandatory health care, sugary soda bans, anti-bullying laws, zero tolerance policies, political correctness: these are all outward signs of a government—i.e., a societal elite—that believes it knows what is best for you and can do a better job of managing your life than you can.

This is tyranny disguised as “the better good.”

Indeed, this is the tyranny of the Nanny State: marketed as benevolence, enforced with armed police, and inflicted on all those who do not belong to the elite ruling class that gets to call the shots.

So-called “sin taxes” have become a particularly popular technique used by the Nanny State to supposedly discourage the populace from engaging in activities that don’t align with the government’s priorities (consuming sugary drinks, smoking, drinking, etc.).

Personally, I don’t think the government really cares how its citizens live or die: they just want more of the taxpayers’ money, and they figure they can rake it in by using sin taxes to appeal to that self-righteous segment of every society that sees nothing wrong with imposing their belief systems on the rest of the populace.

Examples abound.

For instance, a growing number of cities and states (Washington DC, Philadelphia, San Francisco, and Seattle, among others) have adopted or considered imposing taxes on sugary drinks, as much as a dollar more for a two-liter bottle of soda, supposedly in the hopes of forcing lower-income communities that struggle with obesity and diabetes to make healthier dietary choices by making the drinks more expensive.

The faulty logic behind these sin taxes seems to be that if you make it cost-prohibitive for poor people to pursue unhealthy lifestyle choices, they’ll stop doing it.

Except it doesn’t really work out that way.

Study after study shows that while sales of sugary drinks decreased sharply in cities with a soda tax, sales figures spiked at stores located outside the city. In other words, people just shopped elsewhere.

You won’t convince former New York mayor Michael Bloomberg of this, however. Bloomberg, a 2020 Democratic presidential hopeful, believes the government needs even greater tax powers in order to force Americans—especially poor people—to make smarter lifestyle choices. “When we raise taxes on the poor, it’s good because then the poor will live longer because they can’t afford as many things that kill them,” stated Bloomberg.

Folks, this right here is everything that is wrong with the power-hungry jackals that aspire to run the government today: by hook or by crook, they’re working hard to frogmarch the citizenry into complying with their dictates, because they believe that only they know what’s best for you.

It’s this same oppressive mindset that’s been pushing social credit systems (here and in China) that reward behavior deemed “acceptable” and punish behavior the government and its corporate allies find offensive, illegal or inappropriate.

It’s the same mindset that supports the government’s efforts to compile a growing list—shared with fusion centers and law enforcement agencies—of ideologies, behaviors, affiliations and other characteristics that could flag someone as suspicious and result in their being labeled potential enemies of the state.

It’s the same mindset that has government agents spinning a sticky spider-web of threat assessments, behavioral sensing warnings, flagged “words,” and “suspicious” activity reports using AI eyes and ears, social media, behavior sensing software, and citizen spies to identify potential threats.

It’s the mindset behind the red flag gun laws, growing in popularity as a legislative means by which to seize guns from individuals viewed as a danger to themselves or others. “We need to stop dangerous people before they act”: that’s the rationale behind the NRA’s support of these red flag laws, and at first glance, it appears to be perfectly reasonable to want to disarm individuals who are clearly suicidal and/or pose an “immediate danger” to themselves or others.

And it’s the same mindset that allows squadrons of AI censors to shadowban individuals for expressing their unfiltered, politically incorrect opinions and beliefs on social media: all in an effort to keep them in line.

Rounding out this dystopian campaign to impose a chokehold on the populace is a technology sector that has been colluding with the government to create a Big Brother that is all-knowing, all-seeing and inescapable. It’s not just the drones, fusion centers, license plate readers, stingray devices and the NSA that you have to worry about. You’re also being tracked by the black boxes in your cars, your cell phone, smart devices in your home, grocery loyalty cards, social media accounts, credit cards, streaming services such as Netflix, Amazon, and e-book reader accounts.

Clearly, those helping to erect the prison walls that now enclose us purportedly for our own good are not people that understand the concept of freedom or individual rights.

Unfortunately, this is what happens when you empower the government and its various agencies, agents and corporate partners to act in loco parentis for an entire nation.

All of the incremental bricks that have been laid over the years as part of the police state’s prison wall—the invasive surveillance, the extremism reports, the civil unrest, the protests, the shootings, the bombings, the military exercises and active shooter drills, the color-coded alerts and threat assessments, the fusion centers, the transformation of local police into extensions of the military, the distribution of military equipment and weapons to local police forces, the government databases containing the names of dissidents and potential troublemakers—have helped to acclimate us slowly to a life in prison.

Funded with our taxpayer dollars and carried out in broad daylight without so much as a general outcry from the citizenry, these prison walls have been sold to us as a means of keeping us safe  behind bars and out of reach of danger.

Having allowed our fears to be codified and our actions criminalized, we now find ourselves in a strange new world where just about everything we do is criminalized.

Even so, how did we go from enacting laws to make our world safer to being saddled with a government that polices our social decisions? As with most of the problems plaguing us in the American police state, we are the source of our greatest problems.

As journalist Gracy Olmstead recognizes, the problem arose when we looked “first to the State to care for the situation, rather than exercising any sort of personal involvement… These actions reveal a more passive, isolated attitude. But here, again, we see the result of breakdown in modern American community—without a sense of communal closeness or responsibility, we act as bystanders rather than as stewards.”

Olmstead continues:

[Communitarian libertarian Robert] Nisbet predicted that, in a society without strong private associations, the State would take their place — assuming the role of the church, the schoolroom, and the family, asserting a “primacy of claim” upon our children. “It is hard to overlook the fact,” he wrote, “that the State and politics have become suffused by qualities formerly inherent only in the family or the church.” In this world, the term “nanny state” takes on a very literal meaning.

Unfortunately, even in the face of outright corruption and incompetency on the part of our elected officials, Americans in general remain relatively gullible, eager to be persuaded that the government can solve the problems that plague us, whether it be terrorism, an economic depression, an environmental disaster, how or what we eat or even keeping our children safe.

We have relinquished control over the most intimate aspects of our lives to government officials who, while they may occupy seats of authority, are neither wiser, smarter, more in tune with our needs, more knowledgeable about our problems, nor more aware of what is really in our best interests.

Yet having bought into the false notion that the government does indeed know what’s best for us and can ensure not only our safety but our happiness and will take care of us from cradle to grave—that is, from daycare centers to nursing homes—we have in actuality allowed ourselves to be bridled and turned into slaves at the bidding of a government that cares little for our freedoms or our happiness.

The lesson is this: once a free people allows the government inroads into their freedoms or uses those same freedoms as bargaining chips for security, it quickly becomes a slippery slope to outright tyranny.

Nor does it seem to matter whether it's a Democrat or a Republican at the helm anymore, because the bureaucratic mindset on both sides of the aisle now seems to embody the same philosophy of authoritarian government, whose priorities are to remain in control and in power. 

Modern government in general—ranging from the militarized police in SWAT team gear crashing through our doors to the rash of innocent citizens being gunned down by police to the invasive spying on everything we do—is acting illogically, even psychopathically.

When our own government no longer sees us as human beings with dignity and worth but as things to be manipulated, maneuvered, mined for data, manhandled by police, conned into believing it has our best interests at heart, mistreated, and then jails us if we dare step out of line, punishes us unjustly without remorse, and refuses to own up to its failings, we are no longer operating under a constitutional republic.

Instead, what we are experiencing is a pathocracy: tyranny at the hands of a psychopathic government, which “operates against the interests of its own people except for favoring certain groups.”

So where does that leave us?

Having allowed the government to expand and exceed our reach, we find ourselves on the losing end of a tug-of-war over control of our country and our lives. And for as long as we let them, government officials will continue to trample on our rights, always justifying their actions as being for the good of the people.

Yet the government can only go as far as “we the people” allow.

Therein lies the problem: we have suspended our moral consciences in favor of the police state.

The choice before us is clear, and it is a moral choice. It is the choice between tyranny and freedom, dictatorship and autonomy, peaceful slavery and dangerous freedom, and manufactured pipedreams of what America used to be versus the gritty reality of what she is today.

Most of all, perhaps, the choice before us is that of being a child or a parent, of obeying blindly, never questioning, and marching in lockstep with the police state or growing up, challenging injustice, standing up to tyranny, and owning up to our responsibilities as citizens, no matter how painful, risky or uncomfortable.

As author Erich Fromm warned in his book On Disobedience, “At this point in history, the capacity to doubt, to criticize and to disobey may be all that stands between a future for mankind and the end of civilization.”

As I make clear in my book Battlefield America: The War on the American People, if you have no choice, no voice, and no real options when it comes to the government’s claims on your life, your movements, your property and your money, you’re not free.

Personally, I’d rather die a free man having lived according to my own dictates (within the bounds of reasonable laws) than live as a slave chained up in a government prison.

Tyler Durden Wed, 12/11/2019 - 20:25
Tags
Published:12/11/2019 7:42:28 PM
[Markets] Visualizing The Dramatic Rise And Fall Of Cannabis Company Stocks Visualizing The Dramatic Rise And Fall Of Cannabis Company Stocks

The unprecedented expansion of cannabis across North America took the investment world by storm, as investors raced to cash in on the “green rush”.

Yet, as Visual Capitalist's Imam Ghosh details below, even as changing regulations unlock new opportunities, it seems as though the cannabis stock bubble has already burst - at least temporarily.

Today’s visualization dives into the roller coaster of cannabis company stock valuations over the past few years, and which companies remain standing in this hazy market.

A Wild Ride for Cannabis Stocks

The North American Marijuana Index tracks the equally-weighted stocks of leading companies operating in the legal cannabis industry in U.S. and Canada. Companies listed on the index must have at least 50% of their business strategy focused on the legal industry, including ancillary operations that support companies and consumers.

At the tail-end of 2017, the promise of upcoming legalization in two immense markets—California state and Canada—had investors all fired up. The index’s low (105.31 on June 27th, 2017) shot up almost three times to 358.93 by January 8th, 2018.

Things took a sharp turn in the second quarter of 2019, as the expectations for cannabis company stocks encountered a harsh reality post-legalization.

What are the reasons behind such a nosedive? Could the cannabis industry still make a comeback in 2020? We look at some opposing perspectives to answer these questions.

So Much For the Green Rush

The cannabis industry is experiencing significant challenges. In the U.S., legal cannabis faces high taxes—come the new year, consumers in California will see an 80% mark-up on their cannabis at checkout, up from 60%.

North of the border, federal legalization led to immense consumer demand for Canadian cannabis—but supply can’t keep up. To make matters worse, retail stores are slow to roll out, which means Canada is feeling the crunch.

Steep prices, and difficulty purchasing products post-legalization, allow the black market to thrive. It’s clear many cannabis companies have taken a big hit as a result.

According to the Marijuana Index, here are the 10 biggest companies in the space now:

Only one company outside of North America—and even the cannabis sector—lands on this list. The UK-based Big Pharma company GW Pharmaceuticals is steadily growing its industry presence, as it currently holds 41 cannabis patents in the U.S. and Canada combined.

Still, even these big players have seen their valuations drop since the industry was at its peak. Unless the aforementioned issues are ironed out, investors may continue to pull their dollars from the cannabis industry.

A psychological shift has taken place from everyone wanting to own (cannabis) to everyone involved now feeling burned. I think many investors are now over it.

- Chris Kerlow, portfolio manager at Richardson GMP

On the flip side, some investors aren’t calling it quits quite yet.

Long-Term Prospects Are High

While cannabis seems plagued with issues, some argue that these are simply short-term growing pains and will be solved as the industry matures.

Particularly in the U.S., experts predict that cannabis sales could reach immense heights in the next decade:

  1. $30 billion by 2025 (New Frontier Data)

  2. $50 billion by 2029 (Jefferies Group LLC)

  3. $75 billion by 2030 (Cowen Inc.)

  4. $100 billion by 2029 (Stifel Financial Corp)

Compared to a benchmark of $13.6 billion today, these numbers may seem ambitious—but they’re backed by major industry trends. 2020 could well be the year the market stabilizes, as consumers explore an array of retail options and vote with their wallets.

What’s more, key players in consumer industries—from alcohol and tobacco to beauty and fitness—are making big bets in cannabis and CBD-infused products. A higher number of partnerships could spark the next uptick for the industry’s potential.

The marijuana business is not for the faint of heart. But this is a big long-term game.

- Mark Zekulin, CEO of Canopy Growth Corp.

An Eye on What’s to Come

It’s clear there are differing viewpoints on the future of cannabis companies and their respective investors. As this snapshot of cannabis stocks unfolds and transforms in 2020 and beyond, could companies potentially buck the current trend and bounce back? Or will stocks continue to go up in smoke?

Tyler Durden Wed, 12/11/2019 - 20:05
Published:12/11/2019 7:11:37 PM
[Markets] Vatican Caught Using Charity Donations To Cover Budget Shortfalls Vatican Caught Using Charity Donations To Cover Budget Shortfalls

While Pope Francis has long preached about the ills of economic inequality and sins of capitalism, the Catholic church has been robbing Peter's Pence to the tune of over $50 million annually to plug holes in their out-of-control budget - after paying over $3 billion in pedophile priest settlements around the world.

According to the Wall Street Journal, most of the roughly $55 million the church takes in annually goes towards "plugging the hole in the Vatican’s own administrative budget, while as little as 10% is spent on charitable works."

The little-publicized breakdown of how the Holy See spends Peter’s Pence, known only among senior Vatican officials, is raising concern among some Catholic Church leaders that the faithful are being misled about the use of their donations, which could further hurt the credibility of the Vatican’s financial management under Pope Francis. -Wall Street Journal

Of note, Peter's Pence is an annual collection event held every June, billed as a fundraising event for the needy. It is described as a "gesture of charity, a way of supporting the activity of the Pope and the universal Church in favoring especially the poorest and Churches in difficulty. It is also an invitation to pay attention and be near to new forms of poverty and fragility."

A section of the website dedicated to “works realized” describes individual grants, such as €100,000 in relief aid to survivors of last month’s earthquake in Albania or €150,000 for those affected by cyclone Idai in southeastern Africa in March. -WSJ

"The purpose of the Peter’s Pence Collection is to provide the Holy Father with the financial means to respond to those who are suffering as a result of war, oppression, natural disaster and disease," according to the website of the US Conference of Catholic Bishops.

Except that for at least the past five years, just 10% of the money collected (over $55 million in 2018) - actually goes towards the types of charitable causes advertised for the collection, according to 'people familiar with the matter,' who added that approximately 2/3 of the funds have been used to help plug the budget shortfall at the Holy See - which consists of the central administration of the Catholic Church as well as the global papal diplomatic network.

Last year, the budget deficit reached around $78 million on total spending of around $334 million.

The 'reallocation' of charitable donations comes as the Holy See is facing a ballooning budget deficit which the pope has warned cardinals could have a "grave impact" on the economic future of the church. Francis was elected in 2013 with a mandate to overhaul the Vatican's finances following allegations of corruption, waste and incompetence, according to the report.

News of the Vatican's financial mismanagement couldn't come at a worse time - as the church grapples with a scandal over dodgy London real estate investments which led to the dismissal of its chief financial regulator, René Brülhart, in November. First revealed in October, the latest scandal centered on the Holy See's attempts to secure an €100 million ($110 million) loan to acquire luxury property in London's Chelsea neighborhood.

Church law allows the pope to use donations as he sees fit, including to support his administration. According to the collection's website, "Peter’s Pence also contributes to the support of the Apostolic See and the activities of the Holy See,” emphasizing activities that help “populations, individuals and families in precarious conditions."

And now we find out, it contributes a lot.

The assets of Peter’s Pence now total about €600 million, down from about €700 million early in the current pontificate, largely on account of unsuccessful investments, said the people familiar with the funds’ use.

The use of Peter’s Pence donations mostly to plug the budget deficit is particularly sensitive for Pope Francis, who began his pontificate by calling for a “poor church for the poor,” and has continually emphasized the church’s mission to care for and advocate on behalf of the most vulnerable. -Wall Street Journal

Last month, Pope Francis said: "When the money from Peter’s Pence arrives, what do I do? I put it in a drawer? No. This is bad administration. I try to make an investment and when I need to give, when there is a need, throughout the year, the money is taken and that capital does not devalue, it stays the same or it increases a bit."

He forgot to include that he uses it to pad the budget.

Tyler Durden Wed, 12/11/2019 - 19:25
Published:12/11/2019 6:41:51 PM
[Markets] Chicago, Detroit "Least-Prepared" For A Recession, Says New Moody's Report Chicago, Detroit "Least-Prepared" For A Recession, Says New Moody's Report

Authored by Ted Dabrowski and John Klingner via Wirepoints.org,

Moody’s says 23 of the nation’s 25 largest cities are ready for a recession. Two aren’t. They are Detroit and Chicago. Both cities are junk-rated by Moody’s.

Moody’s analyzed four key factors to determine which cities are ready for a recession: fiscal volatility, reserve coverage, financial flexibility and pension risk. The top cities in preparedness were Boston, Charlotte, Denver, San Antonio, San Francisco and Seattle. They scored “stronger” in Moody’s recession preparedness measure, while Chicago and Detroit scored “weaker.” 

Moody’s message should be particularly worrisome given that the city’s firefighter pensions are just 18 percent funded, while the police and municipal funds are less than 25 percent funded. They are among the worst-funded pension plans in the country.

The rating’s agency highlighted Chicago’s poor condition in its report, saying: 

“…both direct city obligations and those of overlapping units of government – continue to weigh heavily on its credit profile. In this scenario analysis, Chicago’s extraordinarily high fixed costs, coupled with its escalating pension liabilities, make it one of the cities least prepared for a near-term recession.”

At Wirepoints, we’ve highlighted those overlapping debts in our recent report, “Wealthy” Chicago households on the hook for up to $2 million in debt each under progressive approach to pension crisis and in an accompanying video.

Chicagoans’ overlapping state and local retirement debts total over $150 billion based on Moody’s pension calculations. That’s the equivalent of a $400,000 “hidden mortgage” on the Chicago households with the means to pay down that debt over time – those earning more than $75,000 annually.

But if the city and state want to take a “progressive approach” to paying down that $150 billion over the next two to three decades – by targeting only those making over $200,000 annually – then the hidden mortgage on those households totals nearly $2 million.

Moody’s added in its report, “Houston, Chicago and Fort Worth stand out as negative outliers in terms of fixed costs, with Chicago and Fort Worth particularly burdened by rising pension contributions.”

Which makes it all the more amazing that neither Gov. J.B. Pritzker nor Chicago Mayor Lori Lightfoot will endorse an amendment to the Illinois Constitution’s pension protection clause.

They shouldn’t wait until a recession comes. By then, it might be too late to save Chicago’s city worker pensions. The city’s population is already shrinking and as that hidden mortgage increases, expect more Chicagoans to flee.

Read more about Chicago’s fiscal crisis:

 

Tyler Durden Wed, 12/11/2019 - 19:05
Published:12/11/2019 6:13:34 PM
[Markets] Blain: Tomorrow’s UK Election Will Be Shockingly Binary Blain: Tomorrow’s UK Election Will Be Shockingly Binary

Blain's Morning Porridge, submitted by Bill Blain

“Bet your bottom dollar that tomorrow there’ll be sun!”

One day more….

As trade war mumbleswerves rumble on (no more tariff increases), the Impeachment case continues to build its own pointless momentum,  Aramco opens limit up (+10%) (Hint – sell!), and we get ready for Christine Lagarde facing the media after running her first ECB Meeting, all eyes are on the UK – our little island set in a silver sea - where tomorrow we get to vote for the least bad of some very poor choices.  

Suddenly, we have last minute wobbles in UK election predictions. Suddenly, the predicted Tory landslide may be less than expected.   Suddenly, a hung Parliament is, apparently, a “real” possibility. Suddenly, these long Sterling positions look very dangerous.  Suddenly, Labour party are eating into Conservative Support – or so says one poll.  Suddenly I see… the Great Game of British Self Flagellation might be extended for another 5 years or so. Joy oh Joy.. !

Please remove all sharp objects from my desk if it happens. 

Of course, hungoparlphobia is exactly what they Tory strategists want us to fear most.  Scare the Bejesus out of us. Present us with a shocking vision of five more years of excruciating Laura Kuenssberg opinions reports, Andrew Neil public vivisections, Naga and Charlie insulting guests on the Brek-drek couch.  Who would possibly not want that..? (The BBC and Channel 4 will love it – 5 more years of political indecision will ensure no one is asking them the hard questions about what they think their role is in elections. Should they merely report the news, or continue to set the news?) 

Like it not, this election is a critical moment for the UK.  We can move forward and elect a government no one (particularly me) is going to be particularly happy about, or we can continue to wallow in our ongoing collective cognitive dissonance over Brexit.  It’s really simple. It’s not actually about parties, party politics or policies – good or bad as they might be. It’s about making a choice of having a government empowered to act, or not.

Imagine the future. 10-years time and the UK is doing much as it always does, and no one really remembers the Brexit nonsense. We’re still drinking French Wine and Proseco, skiing in the Alps, driving EVs designed in Germany and made in Sunderland, and spending summers in the Med. Or,  we’re still arguing about where to stay or leave. Take your pick.  The Europeans don’t care – they just want it done.   

The horror of a shock defeat or hung-parliament is a narrative the Tories have been pushing since the start – raising the spectre of a small number of tactical voters in key constituencies stealing the election. The message is simple: if we Brits don’t vote Tory tomorrow then the UK will be trapped forever in a hung parliament, unable to move forward, and likely to suffer another 5 years of indecision, political vacuum and dither over Brexit.  

That may be about the truest thing the Tories have said through the whole election.  

Meanwhile, the opposition have done surprisingly well redirecting voter fears towards saving our beloved National Health Service.  In order to deny the Tories a chance to move forward, Labour – the party I naturally and have always supported – have redirected the debate down a pointless avenue about how the NHS isn’t safe in Tory hands. Without money and focus it’s not safe in anyone’s hands. A few well-placed front page stories to show the dismal state of the NHS, pin it on Tory indifference and suddenly it’s the number one issue for the electorate.  

From a political perspective – well done Labour, snatching something back from the Tories. From the perspective of the UK's Future – it’s a disaster. We now have an unholy alliance of voters who think a wrecking vote for a hung parliament – consigning the UK to five more years of directionless whittering in Parliament – means they get a chance to reverse the referendum and stay in Europe and save the NHS at the same time. Wrong.

Democracy really is a terrible way to run a country…. 

It would be easier to accept the need to vote for them if the Tories accompanied the Get-It-Done message with some really sensible initiatives on growth, trade, AI, Robotics, sellable polices about rebuilding social infrastructure, opening up and focusing education and making it free.  But that’s not the fight they chose to fight. 

The NHS is a key matter –  it can no longer remain a sacred cow. Doctors and Nurses are the most valuable people in our society, and they will tell you the NHS needs reform, less management and more leadership, and funds redirected to get the elderly into long-term care rather than filling hospital beds and emergency rooms. A root and branch grub out of entrenched bureaucracy will do more to make it fit for purpose than screaming headlines. Reforming the Health Service will be a massive undertaking, and doesn’t for one moment mean privatising it – yet no UK political party has the bravery to address it. 

Tomorrow’s UK election will be shockingly binary. Either:

  • We move forward – which happens with a Conservative Majority, or 
  • We start the Brexit debate all over – which happens under a hung parliament, a Labour led coalition or an unlikely Labour majority. 

Buy or sell the UK and Sterling on that basis. The vote actually boils to down to the choosing a government that will govern and move the UK out of its current hole.  If we fail to do so, then don’t blame the politicians – blame ourselves. 

Election Coverage

The plan for the Election here at Shard is going to be an all-nighter from 10-pm onwards. I’ll be putting out a stream of commentary on www.morningporridge.com, and posting Porridge Specials early morning, a round up at 6.00 am and a final porridge comment at the usual time…   

Tyler Durden Wed, 12/11/2019 - 18:25
Tags
Published:12/11/2019 5:42:55 PM
[Markets] The Fed: Powell says changes to Fed’s inflation-fighting framework will be meaningful Fed Chairman Jerome Powell said Wednesday that changes to the Fed’s inflation framework, to be announced next year, will be meaningful.
Published:12/11/2019 5:12:05 PM
[Markets] Dow Jones Futures: Lululemon Lags Late; Why These 3 Earnings Reports Matter For Stock Market Rally Futures: Lululemon Athletica fell late on weak guidance after Apple and chips led Wednesday's stock market rally. Thursday night's Adobe, Broadcom and Costco earnings will be key. Published:12/11/2019 5:12:05 PM
[Markets] Harvey Weinstein Reaches $47 Million Settlement, Wiping The Civil Slate Clean Harvey Weinstein Reaches $47 Million Settlement, Wiping The Civil Slate Clean

Money talks and sexual predators walk.

That appears to be the anticlimatic end of the #MeToo story arc, which started with Harvey Weinstein, and is set to end with a multi-million cash settlement ending effectively all civil cases against the former Hollywood mogul.

According to the WSJ, Harvey Weinstein, his former associates, insurers and accusers have all reached a nearly $47 million tentative settlement of virtually all the civil cases pending against him, about $25 million of which will compensate women who have accused the Hollywood producer of sexual misconduct.

Under the terms of the agreement, Weinstein and his former associates won't admit wrongdoing; the deal still needs to be approved by a bankruptcy judge and a judge overseeing a proposed class-action lawsuit.  Even better for the "not guilty" Weinstein, the bulk of the settlement money will be paid not by him but by his insurance policies, including those held by his former studio.

While the deal will resolve all but two of the civil sexual-misconduct lawsuits and other legal claims filed against Weinstein, the settlement won’t impact the criminal case brought by Manhattan prosecutors against the former producer, which is set to go to trial on January 6. Weinstein has pleaded not guilty and denied all allegations of nonconsensual sex.

The WSJ reports that the settlement is the culmination of more than a year of negotiations, which involved countless parties, including Weinstein's lawyers, his former film studio, the New York attorney general’s office, insurers and alleged victims. The negotiations also included the former associates of Mr. Weinstein who some women claimed had enabled Mr. Weinstein’s alleged abuse. It also resolves a suit filed by the New York attorney general that accused his former studio’s executives and board of failing to protect women from his alleged misconduct.

Here is how the money will be divided up according to the proposed deal:

  • $6 million will go to women who have filed lawsuits and legal claims and their attorneys.
  • $18.6 million will be set aside to create a settlement fund for additional alleged victims, including those covered by the attorney general’s suit.
  • $7 million will go to some creditors of the film studio
  • $12 million will cover the costs of lawyers who defended Weinstein’s former associates against the suits.
  • $1 million will fund Weinstein’s defense costs to fight lawsuits against two victims who aren’t participating in the settlement.

In other words, for every dollar Weinstein's alleged victims receive now, his lawyers will get two.

Lawyers for those women who refused to take part in the deal portrayed the settlement as unfair. Douglas Wigdor, a lawyer for one of those women, said in a statement that he didn’t believe the deal was the best possible settlement. "It is shameful that $12 million of the settlement is going to the lawyers for the directors who we alleged enabled Harvey Weinstein."

Tyler Durden Wed, 12/11/2019 - 18:04
Published:12/11/2019 5:12:05 PM
[Markets] Only a tenth of Vatican donations directed to charity The Vatican has used the majority of donations to Peter’s Pence collection on plugging its administrative budget.
Published:12/11/2019 4:42:08 PM
[Markets] Porsche Has Received 30,000 Pre-Orders For Taycan Electric Sports Car Porsche Has Received 30,000 Pre-Orders For Taycan Electric Sports Car

As Tesla's market share of the electric vehicle space becomes more contested in early 2020, Reuters has reported that Porsche CEO Oliver Blume told Germany's Handelsblatt newspaper that 30,000 customers in Europe have already placed down payments for its Taycan electric sportscar. 

Blume told the paper that each customer had paid 2,500 euros to reserve the vehicle, and 10,000 of them have placed a firm order to buy the car. 

He said the numbers so far have exceeded the company's expectations.

Taycan, which is Porsche's first series production electric car, will head to US dealerships in 2020. The company is planning on delivering 20,000 of the vehicles next year.

Taycan will compete against the Tesla Model S, both have comparable ranges of approximately 300 miles, and similar acceleration time of 0-60 mph in 3 to 3.5 seconds. 

Porsche is introducing its first electric car into the US market as Tesla controls about 75-80% of US electric vehicle sales. 

Shown below, Tesla Model 3 (estimates via automakers, Clean Technica) was the top-selling electric car in the US in Q3, with about 43,000 units sold. Next was the Tesla Model X with about 6,000 units, Chevy Bolt with 4,800 units, and Tesla Model S with 4,000 units sold.

US electric vehicle sales for the first nine months of the year show that Tesla dominated the US electric car market.

Tesla has noticeably had a jump in the electric vehicle space, but its domination could be running out of time in the early 2020s as major manufacturers, like Porsche and Audi, are bringing online new models that have started series production, which will start entering the US markets in late 2019 and early 2020, ultimately will unleash electric car deflation and drive down prices that could financially strain the "modified Ponzi scheme" known as Tesla. 

 

Tyler Durden Wed, 12/11/2019 - 17:25
Published:12/11/2019 4:42:08 PM
[Markets] The Dow Rose 30 Points Because the Fed Didn’t Make a Move All three major stock indexes closed slightly above the break-even line on Wednesday. The Federal Reserve kept interest rates unchanged following a two-day meeting and indicated that rates will likely stay on hold for the foreseeable future. Published:12/11/2019 4:42:08 PM
[Markets] This is how dangerous ‘dollar-cost ravaging’ can be for your retirement Dollar-cost averaging is a popular strategy in which an investor purchases an asset at regularly timed intervals to mitigate the risk of buying high. But what about “dollar-cost ravaging?” Published:12/11/2019 4:12:21 PM
[Markets] NewsWatch: Own stocks, thank the Fed and don’t expect the next U.S. recession to start anytime soon, says BCA Research U.S. economy may chug along for another two years without a blip thanks to the Federal Reserve’s low rates, which makes it a good time to own stocks, say analysts at BCA Research.
Published:12/11/2019 4:12:20 PM
[Markets] "This Is The End Of The World For The Average Person..." "This Is The End Of The World For The Average Person..."

Authored by Mac Slavo via SHTFplan.com,

According to Roey Tzezana, a future studies researcher at Israel’s Tel Aviv University, technology will continue to advance, and therefore, so will automation.  As this happens, the gap between the wealthy and the poor will increase as the middle class fades into nonexistence.

According to Haaretz, this is the grim reality Tzezana sees for our future: one without jobs or purpose. He argues that the jobs that will survive automation will be lower-paying, unskilled laboring jobs.  And since machines won’t need to be paid, companies can profit without having the overhead costs of labor.  But what most of the futurists fail to mention, is that without jobs and some sort of income, people won’t have the money to help corporations profit anymore. It’s a double-edged sword, but worth mentioning.

Recently the Boston Consulting Group released a report on global trends in future jobs and found that the jobs of the future are ones such as waiting on tables, cleaning, child care, and nursing care – and the groups of job skills with the highest rate of growth after digital skills is social services and education. –Haaretz

“This figure is the end of the world for the average people,” Tzezana said, speaking about the growing gap between labor productivity and wages.

“It reflects a rather depressing picture: The state and the economy are advancing by storm - but the workers are almost not benefitting from this progress and are left behind. It is almost a catastrophe.

This will all happen faster than we think too, says Tzezana.

“The deeper and more interesting questions are not whether new jobs will be created, but what is the pace that old jobs disappear and new jobs open up, or what is the pace at which the tasks the jobs require change and create a demand for new expertise, specializations, and skills. The speed of closing tasks and opening new tasks is changing, and it is overwhelming,” he says.

“All the reports of the McKinsey consulting firm talk about technological progress requiring ‘up skills’ and the ability to adapt; a view that is possible to develop, learn and grow and a way of thinking of an entrepreneur – all the time looking for opportunities. All these are wonderful slogans that the large international consulting companies spread and there is a reason for it – the profile of the employees in these organizations is that of young workers who learn all the time,” says Tzezana.

Tzezana added that currently, we are seeing people moving from the middle class, for example manufacturing workers whose factories closed down because the work moved to China.

“It doesn’t match the ideas of democracy because democracy is based on the middle class,” Tzezana told Haaretz.

“It is harder for workers from the lower class to vote in an intelligent manner and make intelligent decisions. It is a situation that over time does not enable the continuation of democracy as we know it.”

Now factories are returning to the United States, and this doesn’t help anyone because those jobs are not back; they are now automated, he says.

“This is not the problem of just one or two people,” Tzezana continued.

“When a lot of people experience this drop, we are talking about an economic crisis: It is not just a problem only for those who can’t pay their mortgages — 60% of the sales of most companies are to the general public and if the public can’t afford to buy a new computer, the entire economy enters a crisis.

Tyler Durden Wed, 12/11/2019 - 17:05
Published:12/11/2019 4:12:20 PM
[Markets] Chris Hedges: The Great American Shakedown Chris Hedges: The Great American Shakedown

Authored by Chris Hedges via TruthDog.com,

The Democratic Party and its liberal supporters are perplexed. They presented hours of evidence of an impeachable offense, although they studiously avoided charging Donald Trump with impeachable offenses also carried out by Democratic presidents, including the continuation or expansion of presidential wars not declared by Congress, exercising line-item veto power, playing prosecutor, judge, jury and executioner to kill individuals, including U.S. citizens, anywhere on the planet, violating due process and misusing executive orders. Because civics is no longer taught in most American schools, they devoted a day to constitutional scholars who provided the Civics 101 case for impeachment. The liberal press, cheerleading the impeachment process, saturated the media landscape with live coverage, interminable analysis, constant character assassination of Trump and giddy speculation. And yet, it has made no difference. Public opinion remains largely unaffected.

Perhaps, supporters of impeachment argue, they failed to adopt the right technique. Perhaps journalists, by giving voice to opponents of impeachment—who do indeed live in a world not based in fact—created a false equivalency between truth and lies. Maybe, as Bill Grueskin, a professor at the Columbia University Journalism School, writes, impeachment advocates should spend $1 million to produce a kind of movie trailer for all those who did not sit through the hours of hearings, to “boil down the essentials of the film” and provide “a quick but intense insight into the characters, setting the scene with vivid imagery—to entice people to come back to the theatre a month later for the full movie.” Or perhaps they need to keep pounding away at Trump until his walls of support crumble.

The liberal class and the Democratic Party leadership have failed, even after their defeat in the 2016 presidential election, to understand that they, along with the traditional Republican elites, have squandered their credibility. No one believes them. And no one should.

They squandered their credibility by promising that the North American Free Trade Agreement (NAFTA) would, as claimed by President Bill Clinton, create 200,000 new, well-paying jobs per year; instead, several million jobs were lost. They squandered it by allowing corporations to move production overseas and hire foreign workers at daily wages that did not equal what a U.S. unionized worker made in an hour, a situation that obliterated the bargaining power of the American working class. They squandered it by allowing corporations to use the threat of “offshoring” production to destroy unions, suppress wages, extract draconian concessions and push millions of workers into the temp and gig economies, where there are no benefits or job security and pay is 60% or less of what a full-time employee in the regular economy receives. They squandered it by forcing working men and women to take two or three jobs to support a family, jacking up household debt to $13.95 trillion. They squandered it by redirecting wealth upward, so that during the Clinton administration alone 45 percent of all income growth went to the wealthiest 1%. They squandered it by wiping out small farmers in Mexico, driving some 3 million of them off their lands and forcing many to migrate in desperation to the United States, a human tide that saw the U.S. right wing and President Trump direct mounting rage toward immigrants. They squandered it by turning our great cities into urban wastelands. They squandered it by slashing welfare and social service programs. They squandered it by supporting endless, futile wars that have an overall price tag of between $5 trillion and $7 trillion. They squandered it by setting up a surveillance system to spy on every American and then lying about it. They squandered it by catering to the big banks and gutting financial regulations, precipitating the 2008 economic meltdown. They squandered it by looting the U.S. Treasury to bail out banks and financial firms guilty of massive financial crimes, ordering the Federal Reserve to hand over an estimated $29 trillion to the global financiers responsible for the crash. They squandered it by not using this staggering sum instead to provide free college tuition to every student or universal health care, repair our crumbling infrastructure, transition to clean energy, forgive student debt, raise wages, bail out underwater homeowners, form public banks to foster investments in our communities at low interest rates, provide a guaranteed minimum income and organize a massive jobs program for the unemployed and underemployed, whose ranks are at least double official statistics. They squandered it by cutting child assistance programs—most drastically during the Clinton administration—resulting in 16 million children going to bed hungry every night. They squandered it by leaving over half a million Americans homeless and on the streets on any given day. They squandered it by passing laws that keep students burdened by massive college loan debt that has climbed to $1.4 trillion, debt they cannot free themselves from even if they declare bankruptcy. They squandered it by militarizing police and building the world’s largest system of mass incarceration, one with 25% of the world’s prison population. They squandered it by revoking due process and habeas corpus. They squandered it by passing massive tax cuts for the rich and for corporations, many of which—such as Amazon—pay no federal income tax, ballooning the federal deficit, now at $779 billion and climbing. They squandered it by privatizing everything from intelligence gathering to public education to swell corporate bank accounts at taxpayer expense. They squandered it by permitting corporate money—an estimated $9.9 billion will be spent this presidential election cycle on political advertising—to buy politicians in a form of legalized bribery that sees corporate lobbyists write legislation and create laws. They squandered it by doing nothing to halt the looming ecocide.

The problem is not messaging. The problem is the messenger. The mortal wounds inflicted on our democratic institutions are bipartisan. The traditional Republican elites are as hated as the Democratic elites. Trump is vile, imbecilic, corrupt and incompetent. But for a largely white working class cast aside by austerity and neoliberalism, he at least taunts the elites who destroyed their communities and their lives.

The shakedown that Trump clumsily attempted to orchestrate against the president of Ukraine in the hope of discrediting Joe Biden, a potential rival in the 2020 presidential election, pales beside the shakedown orchestrated by the elites who rule over America’s working men and women. This shakedown took from those workers their hope and, more ominously, their hope for their children. It took from them security and a sense of place and dignity. It took from them a voice in how they were governed. It took from them their country and handed it to a cabal of global corporatists who intend to turn them into serfs. This shakedown plunged millions into despair. It led many to self-destructive opioid, alcohol, drug and gambling addictions. It led to increases in suicide, mass shootings and hate crimes. This shakedown led to bizarre conspiracy theories and fabrications peddled by a neofascist right wing, deceptions bolstered by the lies told by those tasked with keeping the society rooted in truth and verifiable fact. This shakedown led to the end of the rule of law and the destruction of democratic institutions that, if they had continued to function, could have prevented the rise to power of a demagogue such as Trump.

There is zero chance Trump will be removed from office in a trial in the Senate. The Democratic Party elites have admitted as much. They carried out, they argue, their civic and constitutional duty. But here again they lie. They picked out what was convenient to impeach Trump and left untouched the rotten system they helped create.

The divisions among Americans will only widen.

The hatreds will only grow. And tyranny will wrap its deadly tentacles around our throats.

Tyler Durden Wed, 12/11/2019 - 16:25
Tags
Published:12/11/2019 3:40:39 PM
[Markets] Stocks snap two-day losing streak as Fed signals go-slow stance U.S. stocks closed slightly higher Wednesday as investors digested a decision by the Fed to stay on hold indefinitely. Published:12/11/2019 3:40:39 PM
[Markets] In One Chart: Own stocks, thank the Fed and don’t expect the next U.S. recession to start anytime soon, says BCA Research U.S. economy may chug along for another two years without a blip thanks to the Federal Reserve’s low rates, which makes it a good time to own stocks, say analysts at BCA Research.
Published:12/11/2019 3:40:39 PM
[Markets] U.S. stocks finish higher after Fed leaves rates on hold U.S. stocks finish higher after Fed leaves rates on hold Published:12/11/2019 3:12:31 PM
[Markets] Dollar Dumps To 5-Month Lows As Stocks, Bonds Jump On Fed Fold Dollar Dumps To 5-Month Lows As Stocks, Bonds Jump On Fed Fold

The fed officially capitulated...

Source: Bloomberg

...removing any expectations for rate changes until the end of 2020 at the earliest...

Source: Bloomberg

Which sparked initial weakness in the dollar, dumping it to 5-month lows

Source: Bloomberg

But when Powell admitted he would consider bond purchases (not just Bill purchases), the dollar and Treasury yields tumbled...

Source: Bloomberg

Stocks were broadly higher on the day (though Small Caps lagged)...

The S&P dived briefly in the last few minutes on Navarro comments but bounced off vwap...

Treasury yields tumbled across the entire curve by 4-5bps (the belly was a modest outperformer)...

Source: Bloomberg

And the yield curve is tumbling...

Source: Bloomberg

Today was the biggest drop in the dollar in two months, down 8 of the last 9 days...

Source: Bloomberg

Cable roundtripped yesterday's "Johnson might not win by a mile" fears, as the latest polls suggested that he will...

Source: Bloomberg

With the most hedging since the Referendum vote...

Source: Bloomberg

Yuan also roundtripped on the day, despite more

Source: Bloomberg

Cryptos continue to limp lower...

Source: Bloomberg

Copper continued its charge higher today, crude was weaker as PMs gained on a weak dollar and Fed promises...

Source: Bloomberg

Oil prices tumbled after last night's API and this morning's DOE data showed a surprise crude build (but the machines bought the F'ing dip...

Silver soared back today as the dollar skidded - erasing a large part of the payrolls panic puke...

And gold did run the stops above the payroll sprint before fading back...

And gold in yuan erased the payrolls plunge...

Source: Bloomberg

So, summing it all up - it seems Powell and his merry men (and women... and any non-binary members of the FOMC) are not all-seeing... and we will have to 3wacth the 'turn' repo rate to see if they really can hold this shitshow together through year-end...

Oh and about that Aramco IPO - remember the last time a massive sovereign energy firm went public at over a trillion dollars...

Source: Bloomberg

Tyler Durden Wed, 12/11/2019 - 16:02
Published:12/11/2019 3:12:31 PM
[Markets] US STOCKS SNAPSHOT-Wall Street edges up after Fed holds rates steady Published:12/11/2019 3:12:31 PM
[Markets] Stock Market Ekes Out Gains As Fed Keeps Rates Untouched; Watch This Retailer's Earnings The stock market put in a mixed performance Tuesday, as the Fed left interest rates unchanged after its final meeting of the year, as expected. Published:12/11/2019 2:45:28 PM
[Markets] Hours-Long Taliban Assault On Bagram Repelled By US Airstrikes Days After 'Peace' Talks Resume Hours-Long Taliban Assault On Bagram Repelled By US Airstrikes Days After 'Peace' Talks Resume

In awkward timing for the Trump administration, which just this week reinvigorated direct peace negotiations with the Taliban this in Doha, the United States' largest military base in Afghanistan came under massive attack Wednesday by the Taliban insurgency.

"Apache attack helicopters ran gun runs near Bagram Airfield in Afghanistan on Wednesday while F-16 fighter jets soared overhead in response to car bombs detonating near the perimeter," military journalist Jack Murphy reports.

Reports say it began upon at least two suicide car bombs being detonated along the bases' perimeter, targeting a medical facility, followed by a some three hour gun battle, resulting in at least 3 Afghan allied forces killed and over 70 wounded; however, no US forces were among the casualties, but 5 Georgian coalition forces were injured.

Afghan security forces inspect the site of an attack in a US military air base in Bagram, north of Kabul, via Reuters.

Afghan authorities finally declared the operation to repel the assault and secure the area had ended 12 hours after it began.

It appears the attack significant and coordinated enough that US forces had to call in airstrikes to put it down. "Taliban fighters who remained after an unsuccessful attempt to breach Bagram airfield were killed in a series of airstrikes this evening," a US coalition spokesman said. "The fighters barricaded themselves inside the medical facility building they attacked early Wednesday morning."

"Coalition forces, in coordination with Afghan Security Forces, informed local residents and blocked off the area before conducting these airstrikes to ensure their safety," the military official added. 

And ABC News reports, citing local sources:

The explosion at the site of the medical facility was “huge,” according to the Parwan police chief.

Scene of a car bombing near the US Bagram Air Base on Wednesday, EPA-EFE.

The major assault came days after on Saturday chief US negotiator Zalmay Khalilzad resumed discussions with the Taliban in Doha, in a first meeting following Trump's prior cancellation of a controversial meeting which was scheduled for Camp David to be held days before the Sept. 11 anniversary.

Of the renewed talks, the State Department indicated, "The focus of discussion will be a reduction of violence that leads to intra-Afghan negotiations and a cease-fire," according to ABC News

There's currently growing bipartisan calls after this week's Washington Post bombshell revelations centered on the 'Afghanistan Papers' — previously classified documents revealing top US officials knowingly lied about the war to the public for years — to immediately end America's longest running war and hold Congressional inquiries as to how it dragged on this long.

One among many 'Afghan Papers' testimonies: "Conflict generates wealth," top general admitted

“We ought to call for public hearings on Afghanistan based on the Post’s reporting of the ‘Afghanistan Papers,’ and we’ll ask what our mission has been, why did it go wrong, who all lied to the American people,” Rep. Ro Khanna (D-Calif.), a member of the House Armed Services Committee, urged on Wednesday.

“Subpoena all of the people who were mentioned and have them account and explain to the American people in some cases why they lied and in other cases why they were utterly incompetent,” Khanna added.

Tyler Durden Wed, 12/11/2019 - 15:30
Published:12/11/2019 2:45:28 PM
[Markets] Fed signals no change in interest rates in 2020 in more upbeat view of the economy The Federal Reserve Wednesday signaled it is more upbeat about the economy and policy is on hold for now. Published:12/11/2019 2:12:42 PM
[Markets] Upgrade: Once you hit this age, you’re far more likely to feel lonely 4 risk factors that can predict if you’ll be lonely as you get older
Published:12/11/2019 2:12:42 PM
[Markets] Three Men Arrested In NJ For Running Alleged $722 Million Crypto Ponzi Scheme Three Men Arrested In NJ For Running Alleged $722 Million Crypto Ponzi Scheme

Authored by Kollen Post via CoinTelegraph.com,

United States authorities in New Jersey have announced the arrest of three men who are accused of defrauding investors of over $722 million as part of alleged crypto ponzie scheme BitClub Network, per a Dec. 10 announcement from the Department of Justice.

image courtesy of CoinTelegraph

The accusations against BitClub Network

According to the press release, BitClub Network promised massive rates of return in exchange for investments in a shared cryptocurrency mining pool. The parties at the center of the scheme then allegedly misappropriated over $722 million of those funds into their own lavish living rather than the promised mining pool. 

Authorities further accuse the three men arrested of falsifying information on returns in order to solicit more investment as well as 

The three accused are Matthew Goettsche and Jobadiah Weeks — both from Colorado — and Joseph Abel of California. Authorities are charging the first two with conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison, as well as conspiracy to offer and sell unregistered securities. Abel, who was apparently less central to the scheme, has only been charged with conspiracy to offer and sell unregistered securities, a charge that carries a maximum prison term of 5 years.

The press release mentions additional conspirators who have not been named or charged with crimes.

A suspicious history

This is not the first indication that BitClub may not be a fully above-board operation. Back in 2016, crypto news outlet 99Bitcoins warned against investing in BitClub, despite removing an earlier “scam” label from the company. The author, Ofir Beigel, explained: 

After gathering the facts I can’t prove that Bitclub network is a scam beyond a shadow of a doubt. I do however still think that Bitclub Network’s business model is lacking and wouldn’t invest in it personally.”

Back in March of 2017, Cointelegraph reported on accusations that BitClub had launched a malleability attack on the Bitcoin (BTC) network.

Ongoing legal action against OneCoin

Arguably the most famous crypto exit scam in history, the case of OneCoin has seen notable recent legal action. In November, a jury in Manhattan found an attorney guilty of laundering over $400 million on behalf of OneCoin’s famed founder Ruja Ignatova, also known as the Cryptoqueen. For his services, he was allegedly paid $50 million. 

Ignatova’s location remains unknown. Only last week, OneCoin’s website finally went offline, having helped the scheme garner $4 billion.

Tyler Durden Wed, 12/11/2019 - 15:10
Published:12/11/2019 2:12:42 PM
[Markets] Watch Live: Fed Chair Powell Avoid Admitting QE4 Has Begun & Repocalypse Is Imminent Watch Live: Fed Chair Powell Avoid Admitting QE4 Has Begun & Repocalypse Is Imminent

The Fed's balance sheet is expanding at a record rate and 'turn' repo rates are soaring (despite endless daily liquidity provisions); so today's FOMC press conference will be fun to see Powell squirm as he desperately avoids any admission that The Fed is in panic mode - which it is - and will never, ever raise rates ever again (which it won't)...

If everything's so awesome in the economy, why is all of the above occurring?

Watch Live (due to start at 1430ET):

Tyler Durden Wed, 12/11/2019 - 14:25
Published:12/11/2019 1:40:56 PM
[Markets] The Fed Stands Pat on Rates—And, More Importantly, Expects to for a While The Federal Reserve held interest rates steady and signaled it expects to remain on hold for the foreseeable future. Published:12/11/2019 1:40:56 PM
[Markets] Federal Reserve signals no rate hikes in 2020, just one in 2021 The Federal Reserve left its benchmark interest rate unchanged and signaled no changes next year after its latest meeting to evaluate the economy. The Fed's so-called dot plot shows no rate hikes in 2020 and just one in 2021. The "current stance of monetary policy is appropriate to support sustained expansion of economic activity," the Fed said Wednesday. The U.S. appears to have stabilized at steady but slower rate of growth and inflation is still below the Fed's 2% target. The vote was unanimous to leave the short-term fed funds rate at a range of 1.5% to 1.75%. Published:12/11/2019 1:10:56 PM
[Markets] FOMC Leaves Rates Unchanged, Signals No Action Until 2021 Earliest FOMC Leaves Rates Unchanged, Signals No Action Until 2021 Earliest

Since The Fed cut rates in October, stocks have surged, bonds and the dollar have flatlined, and gold has leaked lower...

Source: Bloomberg

However, the yield curve is significantly flatter (despite a brief steepening)...

Source: Bloomberg

Oh, and as a reminder, repo rate for the 'turn' are soaring...

Despite endless daily repo liquidity and a balance-sheet that is expanding at its fastest rate ever...

The last few months have seen the market price-out most of the uber-dovish sentiment, with less than one rate-cut now priced-in before the end of 2020...

Source: Bloomberg

Which has left the market pricing in a 5% chance of an actual rate-hike today!!!!

Source: Bloomberg

*  *  *

So what can Powell say today? Expectations are for marginal language changes at most but as MacroHive's Bilal Hafeez notes,m there are three main scenarios:

  • Base-case: With the trade deal uncertainty still hanging over the economy and markets, the Fed will maintain a cautious tone but likely refrain from delivering new easing measures (either rate cuts or a new facility, like the SRF or more QE). Data has been mixed but last week’s solid employment report gives the Fed some cloud cover to take a wait-and-see approach into 2020. The FOMC will likely reiterate that policy remains appropriate and that rates will remain on hold for 2020. At this meeting the press conference matters more than the statement and Summary of Economic Projections (SEP) forecasts. We expect Chair Powell to downplay concerns over the repo operations. He will likely state that reserves in the system are slowly returning, but that the Fed remains on alert around year-end.

  • Hawkish-case: It’s a low probability outcome, but we are re-introducing the hawkish case in this preview in the event the Fed is increasingly more confident that it has managed to ‘soft land’ the economy. Although we do not think SEP projections have the same sort of cache as before, the risk is that their path will maintain the upward bias for 2021 and 2022.

  • Dovish-case: Building upon the base case scenario, which is already leaning to the dovish side, the Fed could deliver a dovish message in a couple ways. The most straightforward way would be to flatten the dot plot and suggest hikes are no longer on the cards as far as the eye can see. In many ways, recent Fed speeches suggest that they would only raise rates if inflation is consistently running above their 2% target. Related to this would be if Chair Powell mentions that the Fed is close to making a change on their 2% target and would be introducing a new framework that would allow for periods of inflation overshooting ahead.

*  *  *

As expected, The Fed held rates steady:

  • *FED LEAVES RATES UNCHANGED

  • *FED SAYS RATES ARE "APPROPRIATE" TO SUPPORT GROWTH, JOBS

  • *FED REMOVES REFERENCE TO "UNCERTAINTIES" AROUND OUTLOOK

but all eyes are on the Dot-Plots, as they collapse to a relatively flat view of the rate-path ahead...

Source: Bloomberg

This is what capitulation looks like...

Source: Bloomberg

And the 2020 terminal rate has been ratcheted lower and lower in the last year...

Source: Bloomberg

It would be a shocker to everyone if markets move on this announcement.

*  *  *

Full Statement Redline below...

 

 

Tyler Durden Wed, 12/11/2019 - 14:04
Published:12/11/2019 1:10:56 PM
[Markets] The Fed: Fed upgrades economic outlook and signals it is on hold for now The Federal Reserve Wednesday signaled it is more upbeat about the economy and policy is on hold for now.
Published:12/11/2019 1:10:56 PM
[Markets] U.S. budget deficit hits $209 billion in November, on track for $1 trillion year U.S. budget deficit hits $209 billion in November, on track for $1 trillion year Published:12/11/2019 1:10:56 PM
[Markets] Is Zoltan's Market Doomsday Imminent? Here Are The Two Things To Watch Is Zoltan's Market Doomsday Imminent? Here Are The Two Things To Watch

In the aftermath of Zoltan Pozsar's stunning "doomsday" report about an upcoming crisis in the repo market, which we discussed extensively yesterday, and which predicted that the Fed may "lose control of overnight rates" leading to a vicious dislocation in repos coupled with a paralysis in the FX swap market, many traders who (pretend to) understand the implications of what the former Fed strategist said, have quietly hunkered down and are looking carefully for sings that Pozsar is correct, a worst case scenario that could then lead to a spike in Treasury yields, a forced deleveraging of hedge funds, and a plunge in equities. In short: a stock market apocalypse.

But what are the signs that Pozsar is looking at, to determine that a liquidity crunch is imminent? There are two key leading indicators that serve as an advance warning that all hell may be about to break loose.

The first thing to watch to determine if the repocalypse 2.0 is about to hit, is the repo rate itself.

While the overnight general collateral repo rate remains dormant, the same can not be said about its forward cousin, the "turn" repo rate which covers the year end period of Dec 31-Jan 2, and which as we pointed out last night, has jumped to 4.10% as of Tuesday, and which on Wednesday moved wider by another 5bps to 4.15%, according to Curvature securities.

As a reminder, the last "turn" saw the overnight GC repo soar as high as 6.00%, so it is safe to assume that with about $100BN less in reserves, the overnight repo may rise as high if not higher...

... and the turn could go higher still.

The second, and perhaps more critical indicator of a coming market crisis, are FX swaps.

Recall Pozsar warned that as a result of a lack of bank reserves spread evenly across the system, "FX swaps could end up as the orphaned asset class without an obvious backstop, and that may force banks in some parts of the world to the edge of the proverbial abyss." As a result, the "year-end in the FX swap market is shaping up to be the worst in recent memory, and the markets are not pricing any of this."

Needless to say, he saw no need to mince his words which suggests that the situation is extremely serious - not to mention that there are few repo market experts as erudite on the nuances of financial plumbing as Pozsar - and he may well be right, if he is correct about another even more stunning allegation: that "at least one large U.S. bank appears to be pricing some of its FX swaps trades such that it misses those trades – a polite way of clamping down market making activities." We translated this as follows: at least one large US bank appears to be actively pushing for a collapse in the FX swap market, with a very specific intention: to force a market crash in the coming days, forcing the Fed to launch full blown QE 4, not just a monetization of T-Bills.

Naturally, the most accurate indicator that the FX swap market is starting to freeze, are cross-currency basis swaps themselves. And, as the chart below shows, both EUR and JPY 3-month swaps have started to push sharply wider in recent weeks. As Bloomberg points out, the premium to swap Japanese yen into US dollars for three months - a bet on rising dollar scarcity - widened more than 4 bps to the highest level in seven weeks, while the a similar spread to convert euros into dollars expanded by as much as 6 bps.

Alternatively, one can use a blended global USD liquidity proxy in the form of an aggregate USD basis swap, which also shows significant tightening in the past week.

As a reminder, as we have pointed out since 2015, a widening in such basis swaps confirms that a dollar funding squeeze is building. And while these were relatively normal when the Fed was engaging in QT and shrinking its balance sheet, a repeat when the Fed is once again aggressively expanding its balance sheet, is a problem, to say the least.

Looking at the charts above, there is good news in that none of the current reads are remotely as apocalyptic as Pozsar is making them. However, there are three critical dates in the coming week that could results in a violent move wider in both swaps and repo rates, which would then instantly cascade to the rest of the market. They are the following:

  • December 12 - the Fed will announce the details of the next round of Fed RP Operations. As Curvature's Scott Skyrm noted yesterday, "I look for the Fed to announce a $50 billion (at least) term operation for Monday, December 23 and a $50 billion (at least) term operation for Monday, December 30. If the Fed announces operations of $25 billion or less on those days then Turn rates will immediately spike higher."
  • December 15 - China tariff decision. While not directly linked to the repo market, an adverse outcome here would result in a sharp drop in risk assets and concurrent tightening in financial conditions.
  • December 16 - Treasury tax remittance. A major liquidity drain, if the level of reserves is indeed catastrophically low this event could trigger a blow out in repo rates. As a reminder, many attributed the first repocalypse on a similar tax due date on Sept 16.

Together, these three events could potentially have a direct impact on financial conditions, on reserve levels, and by extension, could catalyze the repocalypse that Pozsar is confident is now coming.

So for all those worried that the artificial levitation in stocks is not indicative of underlying liquidity and leverage stresses, keep track of any sharp moves in the series above, as any notable change could become the trigger that ensures traders have to cancel their Christmas vacation for the second year in a row.

Tyler Durden Wed, 12/11/2019 - 13:21
Published:12/11/2019 12:40:51 PM
[Markets] The Ratings Game: UPS stock at risk as rising e-commerce volumes disrupt delivery business, says BMO United Parcel Services Inc. stock slid Wednesday, after BMO downgraded the stock and said the rise of e-commerce is disrupting the delivery business as more parcels go to residential addresses than businesses, squeezing profit for the incumbents.
Published:12/11/2019 12:40:50 PM
[Markets] The Wealthy Are Hoarding Physical Gold The Wealthy Are Hoarding Physical Gold

Via SchiffGold.com,

The world’s rich are hoarding gold – this according to data buried in a recent Goldman Sachs note to clients.

In the note published over the weekend, Goldman recommended diversifying long-term bond holdings with gold, citing “fear-driven demand” for the yellow metal.

Hedge funds and other large speculators boosted their bullish bets on gold by 8.9% through the week ended Dec. 3, according to government data released last Friday. That represents the biggest gain since the end of September.

The Goldman note cited political uncertainty and recession fears as the catalyst for the move toward gold. It also mentioned worries about a wealth tax, increasing interest in Modern Monetary Theory (essentially money-printing) and the current loose central bank monetary policy.

Data buried in the note also revealed that owning physical gold appears to be the preferred method to “hedge against tail events” by the rich.

"Since the end of 2016 the implied build in non-transparent gold investment has been much larger than the build in visible gold ETFs.”

Goldman said the data is consistent with reports that vault demand is surging globally.

Trade data implies that gold in storage has increased far more rapidly than is reflected by financial market instruments, indicating a widespread preference for physical gold instead of gold-linked financial assets … Political risks, in our view, help explain this because if an individual is trying to minimize the risks of sanctions or wealth taxes, then buying physical gold bars and storing them in a vault, where it is more difficult for governments to reach them, makes sense.

“Finally, this build can also reflect hedges by global high net worth individuals against tail economic and political risk scenarios in which they do not want to have any financial entity intermediating their gold positions due to the counter-party credit risk involved.”

As a writer for Yahoo Finance put it.

“This means that for those including gold in their end-of-the-world trade, owning gold bullion is a must.”

You don’t have to be super-rich to invest in gold. And the same reasons the wealthy are hoarding the yellow metal apply to average investors. In a world drowning in government, corporate and consumer debt, and with never-ending loose monetary policy, along with and a political landscape becoming more and more favorable to socialism, it makes sense to own physical gold and store it securely so you have access to your wealth with minimal counterparty risk.

Tyler Durden Wed, 12/11/2019 - 13:00
Published:12/11/2019 12:09:40 PM
[Markets] Stocks Are Going Nowhere as Investors Wait for the Fed The main U.S. stock indexes were steady, but semiconductor stocks rose in response to a report saying sales of chip-making equipment will rise next year. Published:12/11/2019 12:09:40 PM
[Markets] Stocks mostly higher as Wall Street awaits key Fed policy update U.S. stocks are slightly higher Wednesday as investors turn their attention to a Federal Reserve policy update later in the session while waiting for news of progress on China-U.S. trade talks Published:12/11/2019 11:41:52 AM
[Markets] Disney+ is off to a roaring start with 22 million mobile downloads The streaming service, which made its debut Nov. 12, has been downloaded 22 million times to mobile devices in what is probably the most-successful launch in the nascent industry’s history, according to app-tracking firm Apptopia.
Published:12/11/2019 11:41:52 AM
[Markets] "Happening Everywhere In Retail" - Home Depot Links Surge In Thefts To Opioid Crisis  "Happening Everywhere In Retail" - Home Depot Links Surge In Thefts To Opioid Crisis 

The opioid crisis is evolving and is now becoming a burden on retailers, as addicts race to brick and mortar stores, hoping to steal merchandise, and if successful, sell it on the street or pawn it for cash to pay for their next fix.

An absolutely shocking account of this has come from Home Depot executives, who warn that the nation's out of control opioid crisis has sparked a massive surge in thefts in stores across the country.

Bloomberg says the thefts have been so bad in 2019, that it will likely weigh on Home Depot's operating profit margins next year.

"This is happening everywhere in retail," Chief Executive Officer Craig Menear told investors on a Wednesday morning call.

"We think this ties to the opioid crisis but we're not positive about that."

Home Depot is the first retailer to suggest that the opioid crisis has sparked a recent surge in in-store thefts.

The National Retail Federation has said retailers lose, on average, $51 billion per year, but that number is likely to climb in the years ahead due to the opioid crisis.

In one instance, Menear told investors during the call that thieves were apprehended by law enforcement after attempting to steal $16.5 million worth of goods, of which $1.4 million was headed to Home Depot's stores.

He said many Home Depot stores have been taking high-value inventory, like power tools, off sales floors to avoid thefts.

"We have to be vigilant about it," Ann-Marie Campbell, Home Depot's executive vice president of U.S. stores, said.

"We have initiated several pilots to reduce shrink across the board."

Bloomberg said the increased thefts, possibly linked to opioids, was a "significant" reason why the home improvement retailer's operating profit margins will slide to 14% in 2020.

Home Depot shares slid 2% Wednesday on the news of a weakening outlook and increased thefts.

With millions of Americans addicted to opioids and cycling in a life of poverty as income inequality is the widest in the nation's history, their only hope for the next fix is to steal merchandise from retailers for quick cash to fund their addiction. 

This is likely a widespread problem that could become a drag on retailers in the 2020s as the opioid crisis shows no signs of abating in the intermediate future.

With weather now so de rigeur as the scapegoat for weak performance, we suspect it's only a matter of time when other retailers blame opioid-related thefts for their financial woes.

Tyler Durden Wed, 12/11/2019 - 12:40
Published:12/11/2019 11:41:52 AM
[Markets] Horowitz Trips Up Comey's Victory Lap: "Nobody Vindicated Who Touched This FISA" Horowitz Trips Up Comey's Victory Lap: "Nobody Vindicated Who Touched This FISA"

While every painful second of every individual's testimony during the impeachment hearings was relayed and narrative-managed by the mainstream media (and still failed to increase public awareness, let alone support for the Democrats' plan), interested viewers were hard-pressed to find Justice Department Inspector General Michael Horowitz testimony before the Senate Judiciary Committee (on his findings regarding alleged surveillance abuse during the 2016 election) anywhere on the mainstream.

There are plenty of nuggets to enjoy - if you can find a live stream (here) - but this one was particularly noteworthy.

A day after a smug-sounding James Comey tweeted that the IG's report vindicated him:

“So it was all lies. No treason. No spying on the campaign. No tapping Trumps wires. It was just good people trying to protect America.”

Howoritz, in one short sentence, destroyed the former FBI Director's credibility by explaining simply...

"I think the activities we found here don't vindicate anybody who touched this FISA."

As Mr. Horowitz wrote in his report, he lays the blame at the top (cough Comey cough):

“We are deeply concerned that so many basic and fundamental errors were made by three separate, hand-picked investigative teams; on one of the most sensitive FBI investigations; after the matter had been briefed to the highest levels within the FBI; even though the information sought through use of FISA authority related so closely to an ongoing presidential campaign; and even though those involved with the investigation knew that their actions were likely to be subjected to close scrutiny. We believe this circumstance reflects a failure not just by those who prepared the FISA applications, but also by the managers and supervisors in the [investigation’s] chain of command, including FBI senior officials who were briefed as the investigation progressed.”

As WSJ noted ironically, Mr. Comey’s memoir, “A Higher Loyalty,” relates how as FBI director he kept on his desk a copy of the October 1963 memo from J. Edgar Hoover asking for permission to wiretap Martin Luther King. He claims he did so to help ensure the bureau would never forget how a “legitimate counterintelligence mission . . . morphed into an unchecked, vicious campaign of harassment and extralegal attack.”

Mr. Horowitz’s findings about what was done under Mr. Comey’s leadership suggest there’s still a need for such a reminder.

Finally, in case the entire "Russia, Russia, Russia" narrative of the last three years has just become too much for you, here is Senator Lindsay Graham, in two short minutes explaining the whole farce so clearly that we dare even the most dyed in the wool NeverTrumper to explain how this was not a clear act of sedition...

Of course, as Sen. Marsha Blackburn exzclaimed on Twitter, "The fact that CNN and MSNBC refused to run Lindsey Graham's opening statement uninterrupted, but is now carrying Senator Feinstein's, is proof that political bias is not isolated to the FBI."

Tyler Durden Wed, 12/11/2019 - 11:59
Tags
Published:12/11/2019 11:09:37 AM
[Markets] US STOCKS-Dow falls as Boeing, Home Depot weigh; S&P 500, Nasdaq cling to gains The Dow Jones index was pressured by losses in Boeing and Home Depot on Wednesday, while the S&P 500 and the Nasdaq held on to gains as traders awaited the Federal Reserve's December policy statement for clues on the strength of the domestic economy. The U.S. central bank is widely expected to keep borrowing costs steady in its policy announcement, due at 2:00 p.m. ET (1900 GMT). Published:12/11/2019 11:09:37 AM
[Markets] Apple stock price target raised by BofA Merrill on high hopes for 5G Apple Inc. is expected to enjoy a smoother iPhone cycle than usual from 2020 to 2022 as 5G is expected to drive three years of 200 million-plus units, BofA Merrill Lynch said Wednesday. Analysts led by Wamsi Mohan raised their stock price target to $290 from $270, and said they expect lower-cost wearables to further support sales, citing as examples $169 AirPods and a $200 Apple Watch. "Multi-year iPhone visibility and stability, combined with continued double-digit Services revenue growth, should drive the multiple higher, in our opinion," the analysts wrote in a note, reiterating their buy rating on the stock. Earlier, Evercore analysts raised their Apple stock price target to $305 from $275. Shares were up 0.6% and have gained 71% in 2019, while the S&P 500 has gained 25% and the Dow Jones Industrial Average has gained 20%. Published:12/11/2019 10:39:40 AM
[Markets] When It Becomes Serious You Have To Lie: Update On The Repo Fiasco When It Becomes Serious You Have To Lie: Update On The Repo Fiasco

Authored by Michael Lebowitz and Jack Scott via RealInvestmentAdvice.com,

Occasionally, problems reveal themselves gradually. A water stain on the ceiling is potentially evidence of a much larger problem. Painting over the stain will temporarily relieve the unsightly condition, but in time, the water stain will return. This is analogous to a situation occurring within the banking system. Almost three months after water stains first appeared in the overnight funding markets, the Fed has stepped in on a daily basis to “re-paint the ceiling” and the problem has appeared to vanish. Yet, every day the stain reappears and the Fed’s work begins anew. One is left to wonder why the leak hasn’t been fixed. 

In mid-September, evidence of issues in the U.S. banking system began to appear. The problem occurred in the overnight funding markets which serve as one of the most important components of a well-functioning financial and economic system. It is also a market that few investors follow and even fewer understand. At that time, interest rates in the normally boring repo market suddenly spiked higher with intra-day rates surpassing a whopping 8%. The difference between the 8% repo rate recorded on September 16, 2019 and Treasuries was an eight standard deviation event. Statistically, such an event should occur once every three billion years.

For a refresher on the details of those events, we suggest reading our article from September 25, 2019, entitled Who Could Have Known: What The Repo Fiasco Entails.  

At the time, it was surprising that the sudden change in overnight repo borrowing rates caught the Fed completely off guard and that they lacked a reasonable explanation for the disruption. Since then, our surprise has turned to concern and suspicion.

We harbor doubts about the cause of the problem based on two excuses the Fed and banks use to explain the situation. Neither are compelling or convincing. 

As we were putting the finishing touches on this article, the Bank of International Settlements (BIS) reported that the overnight repo problems might stem from the reluctance of the four largest U.S. banks to lend to some of the largest hedge funds. The four banks are being forced to fund a massive surge in U.S. Treasury issuance and therefore reallocated funding from the hedge funds to the U.S. Treasury.  Per the Financial Times in Hedge Funds key in exacerbating repo market turmoil, says BIS“High demand for secured (repo) funding from non-financial institutions, such as hedge funds heavily engaged in leveraging up relative value trades,” – was a key factor behind the chaos, said Claudio Borio, Head of the monetary and economic department at the BIS.

In the article, the BIS implies that the Fed is providing liquidity to banks so that banks, in turn, can provide the hedge funds funding to maintain their leverage. The Fed is worried that hedge funds will sell assets if liquidity is not available. Instead of forcing hedge funds to deal with a funding risk that they know about, they are effectively bailing them out from having to liquidate their holdings. If that is the case, and as the central bank to central bankers the BIS should be well informed on such matters, why should the Fed be involved in micro-managing leverage to hedge funds? It would certainly represent another extreme example of mission creep.

Excuse #1

In the article linked above, we discussed the initial excuse for the funding issues bandied about by Wall Street, the banks, and the media as follows:

Most likely, there was an unexpected cash crunch that left banks and/or financial institutions underfunded. The media has talked up the corporate tax date and a large Treasury bond settlement date as potential reasons.”

While the excuse seemed legitimate, it made little sense as we surmised in the next sentence:

“We are not convinced by either excuse as they were easily forecastable weeks in advance.”

If the dearth of liquidity in the overnight funding markets was due to predictable, one-time cash demands, the problem should have been fixed easily. Simply replenish the cash with open market operations as the Fed routinely did prior to the Financial Crisis.

Since mid-September, the Fed has elected instead to increase their balance sheet by over $320 billion.  In addition to conducting daily overnight repo auctions, they introduced term repo that extends for weeks and then abruptly restarted quantitative easing (QE).

Imagine your plumber coming into your house with five other plumbers and a bull dozer to fix what you assumed was a leaky pipe.

The graph below, courtesy Bianco Research, shows the dramatic rise in the Fed’s balance sheet since September.

Based on the purported cash shortfall excuse, one would expect that the increase in the Fed’s balance sheet would have easily met demands for cash and the markets would have stabilized. Liquidity hole filled, problem solved.

However, as witnessed by the continuing growth of the Fed’s balance sheet and ever-increasing size of Fed operations, the hole seems to be growing. It is worth noting that the Fed has committed to add $60 billion a month to their balance sheet through March of 2020 via QE. In other words, the stain keeps reappearing and getting bigger despite increasing amounts of paint.

Excuse #2

The latest rationale used to explain the funding problems revolves around banking regulations. Many Fed members and banking professionals have recently stated that banking regulations, enacted after the Financial Crisis, are constraining banks’ ability to lend to other banks and therefore worsening the funding situation. In the words of Randy Quarles, Federal Reserve Vice Chair for Banking Supervision, in his testimony to the House Financial Services Committee:

We have identified some areas where our existing supervision of the regulatory framework…may have created some incentives that were contributors

Jamie Dimon, CEO of JP Morgan, is quoted in MarketWatch as saying the following:

“The turmoil may be a precursor of a bigger crisis if the Fed doesn’t adjust its regulations. He said the liquidity requirements tie up what was seen as excess reserves.”

Essentially, Quarles and Dimon argue that excess reserves are not really excess. When new post Financial Crisis regulatory requirements are factored in, banks only hold the appropriate amount of reserves and are not exceeding requirements.

This may be the case, and if so, the amount of true excess reserves was dwindling several months prior to the repo debacle in September.  Any potential or forecasted shortfalls due to the constraints should have been easily identifiable weeks and months in advance of any problem.

The banks and the Fed speak to each other quite often about financial conditions and potential problems that might arise. Most of the systemically important financial institutions (SIFI banks) have government regulators on-site every day. In addition, the Fed audits the banks on a regular basis. We find it hard to believe that new regulatory restraints and the effect they have on true excess reserves were not discussed. This is even harder to believe when one considers that the Fed was actively reducing the amount of reserves in the system via Quantitative Tightening (QT) through 2018 and early 2019. The banks and the regulators should have been alerting everyone they were getting dangerously close to exhausting their true excess reserves. That did not occur, at least not publicly.

Theories and Speculation

A golden rule we follow is that when we think we are being misled, especially by market participants, the Fed, or the government, it pays to try to understand the motive.  “Why would they do this?” Although not conclusive, we have a few theories about the faulty explanations for the funding shortage. They are as follows:

  • The banks and the Fed would like to reduce the regulatory constraints imposed on them in recent years. Disruptions demonstrating that the regulations not only inhibit lending but can cause a funding crisis allow them to leverage lobbying efforts to reduce regulations.

  • There may be a bank or large financial institution that is in distress. In an effort to keep it out of the headlines, the Fed is indirectly supplying liquidity to the institution. This would help explain why the September Repo event was so sudden and unexpected. Rumors about troubles at certain European banks have been circulating for months.

  • The Fed and the banks grossly underestimated how much of the increased U.S. Treasury debt issuance they would have to buy. In just the last quarter, the Treasury issued nearly $1 trillion dollars of debt. At the same time, foreign sponsorship of U.S. Treasuries has been declining. While predictable, the large amount of cash required to buy Treasury notes and bonds may have created a cash shortfall. For more on why this problem is even more pronounced today, read our article Who Is Funding Uncle Sam. If this is the case, the Fed is funding the Treasury under the table via QE. This is better known as “debt monetization”.

  • Between July and November the Fed reduced the Fed Funds rate by 0.75% without any economic justification for doing so. The Fed claims that the cuts are an “insurance” policy to ensure that slowing global growth and trade turmoil do not halt the already record long economic expansion. Might they now be afraid that further cuts would raise suspicion that the Fed has recessionary concerns? QE, which was supposedly enacted to combat the overnight funding issues, has generously supported financial markets in the past. Maybe a funding crisis provides the Fed cover for QE despite rates not being at the zero bound. Since 2008, the Fed has been vocal about the ways in which market confidence supports consumer confidence. 

The analysis of what is true and what is rhetoric spins wildly out of control when we allow our imaginations to run. This is what happens when pieces do not fit neatly into the puzzle and when sound policy decisions are subordinated to public relations sound bites. One thing seems certain, despite what we are being told, there likely something else is going on.

Of greater concern in this matter of overnight funding, is the potential the Fed and banks were truly blindsided. If that is the case, we should harbor even deeper concern as there is likely a much bigger issue being painted over with temporary liquidity injections.

Summary

In the movie The Outlaw Josey Wales, one of the more famous quotes is, Don’t piss down my back and tell me it’s raining.”

We do not accept the rationale the Fed is using to justify the reintroduction of QE and the latest surge in their balance sheet. Although we do not know why the Fed has been so incoherent in their application of monetary policy, our theories offer other ideas for thinking through the monetary policy maze. They also have various implications for the markets, none of which should be taken lightly.

We are just as certain that we are not entirely correct as we are certain that we aren’t entirely wrong. Like the water spot on the ceiling, financial market issues normally reveal themselves gradually. Prudent risk management suggests finding and addressing the source of the problem rather than cosmetics. We want to reiterate that, if the Fed is papering over problems in the overnight funding market, we are left to question the Fed’s understanding of global funding markets and the global banking system’s ability to weather a more significant disruption than the preview we observed in September.

Tyler Durden Wed, 12/11/2019 - 11:24
Published:12/11/2019 10:39:40 AM
[Markets] The Ratings Game: GameStop stock slammed by weak earnings and analyst invokes Jim Morrison GameStop Corp. shares were hit again on Wednesday, as analysts weighed in on another weak quarter that prompted one to invoke Jim Morrison to describe the continued unraveling of the video game retailer.
Published:12/11/2019 10:39:39 AM
[Markets] Boeing, Home Depot share losses lead Dow's 75-point fall DOW UPDATE Shares of Boeing and Home Depot are retreating Wednesday morning, dragging the Dow Jones Industrial Average into negative territory. Shares of Boeing (BA) and Home Depot (HD) have contributed to the index's intraday decline, as the Dow (DJIA) was most recently trading 77 points lower (-0. Published:12/11/2019 10:09:19 AM
[Markets] Boeing-FAA Cabal Exposed: Internal Document Shows FAA Ignored 737 MAX Safety Risks Boeing-FAA Cabal Exposed: Internal Document Shows FAA Ignored 737 MAX Safety Risks

Over the past nine months, the WSJ has led the media pack when it comes to scoops about the lapses at Boeing and the FAA that allowed the Boeing 737 MAX 8 to continue flying, even after a crash in Indonesia raised questions about the plane's safety that were apparently ignored, because a similar crash happened in Ethiopia less than six months later, bringing the combined death toll to above 300.

Earlier on Wednesday, Boeing shares dropped on reports that the 737 MAX won't fly again before the end of the year, even as deliveries "could" resume later this month.

These revelations about the culture at both Boeing and the FAA show very clearly how the agency has lost its way, and how its lapses in oversight opened the door to unimaginable human suffering.

WSJ reporters got their hands on an FAA internal report that was published back in November 2018. An internal FAA analysis of the Lion Air cash, it's expected to be released in full for the House committee hearing Wednesday.

According to the report, experts spotted the risks in the 737 MAX 8's anti-stall system, MCAS, and warned that these planes could average more than one crash a year.

In an aviation industry that sometimes goes almost a decade without an accident, these numbers are obviously unacceptable.

On Tuesday, an FAA spokesman delivered a statement to WSJ: "It was clear from the beginning that an unsafe condition existed," adding that the analysis "provided additional context in helping determine the mitigation action." In an email, the spokesman said such analyses tend to overstate risk because they take the most conservative approach and because specifically identified problems likely appeared more serious than they did in the operating fleet.

After Lion Air, the FAA’s analysis projected as many as 15 similar catastrophic accidents globally over the life of the MAX fleet (roughly 30 to 45 years) unless major fixes were made to a particular automated flight-control system (fixes that Boeing has scrambled to make over the past year).

"The potential for 15 projected crashes “would be an unacceptable number in the modern aviation-safety world," said Alan Diehl, a retired FAA and Pentagon air-safety official, who hasn’t had any involvement in the MAX crisis.

Even still, it might take more than that to win back public confidence, since WSJ and Boeing characterized the MAX as the most crash-prone Boeing model in modern history.

In total, the 737 MAX was projected to log as many crashes s Boeing’s 757, 767, 777, 787 and the latest 747 models combined. The MAX fleet was eventually anticipated to be nearly 5,000 jets world-wide, slightly larger than the combined global fleet of the earlier models that are still in service while the other fleets together total slightly more than 3,800 aircraft.

But in the document obtained by WSJ, the FAA anticipates that Boeing will update the flight control software on the 737 MAX 8 within the next seven or eight months. Of course, there were more deaths before the new software could be finished.

The FAA document anticipated that in roughly seven months, Boeing would devise, test and with the FAA’s approval install revised software for MCAS, the suspect stall-prevention system that led to the October 2018 crash in Indonesia. Meanwhile, the FAA also concluded that it could buy time to prevent another accident by reiterating to airline crews world-wide how to respond in the event of a similar MCAS misfire. If crews were aware of the risk and knew how to respond, the FAA determined it was acceptable to let the planes continue carrying passengers until a permanent design change was in place. That fix is still in progress.

More than any other previous piece of evidence, this document exposes the Boeing-FAA cabal and how corporations and the government conspired to put the lives of millions of unsuspecting travelers at risk.

 

Tyler Durden Wed, 12/11/2019 - 11:05
Published:12/11/2019 10:09:19 AM
[Markets] Capitol Report: Pelosi’s drug-pricing bill set to pass House on Thursday, but pharma stocks are up as it’s unlikely to become law Top Democratic lawmakers say Thursday that the House in the coming days will pass their signature bill that aims to lower drug prices, as they make an effort to show that they’re not solely focused on impeaching President Donald Trump.
Published:12/11/2019 10:09:19 AM
[Markets] Outside the Box: Impeachment is necessary but not sufficient to save the Constitution It is essential that impeachment move forward, writes Chris Edelson. The charges are too grave, the evidence too damning to ignore.
Published:12/11/2019 9:41:50 AM
[Markets] A "Stealthy" Next Recession? A "Stealthy" Next Recession?

Authored by Mac Slavo via SHTFplan.com,

A confusing economic situation has just been made more confusing.  The government claims that jobs are still being created when other indexes show otherwise.

This is not the first time this year conflicting and confusing numbers have been released:

Odd Economic Numbers: Consumer Confidence Falls, But Consumer Spending Remains High

Not much about that made any real sense to anyone who looked at it, and we are now getting more confusing information.

According to a report by Forbes, the prospects of a recession in the U.S. The Institute of Supply Management’s November survey shows that the index of factory activities in the U.S. fell to 48.1 from 48.3 in October (any reading below 50 is indicative of a contraction).  However, the Department of Labor also reported that 266,000 jobs have been added to the economy in November, bringing the unemployment rate down to a historic low of 3.5%. A confusing situation has just been made more confusing.

Factory activities fell, but the U.S. is somehow adding jobs? Forbes was baffled too.

Developed world economies have meanwhile been seriously weakened by prolonged zero interest rates, making them vulnerable to unexpected shocks. Extraordinarily low interest rates distort the price of money, arguably the single most important price signal in a market economy. They poison the business environment, allowing poorly run businesses to survive, jamming the gears of creative destruction that drive any economic renewal. The survival of poorly run businesses also suck profits from more successful businesses, sapping their ability to expand. –Forbes

The next recession could already be here and may never be technically a recession. The next recession, however, may not technically qualify as one. The accepted definition of a recession is two consecutive quarters of contraction in an economy. But, we could have, for example, one quarter of 0.3% growth, followed by a contraction of 1.2% the next, then anemic growth in the third and fourth quarter of, say, 0.1% each, and then another contraction of 0.5%  and so on. While the technical definition of a recession may never be met, the economy would still be shrinking, left to wane inexorably by impotent monetary and fiscal policies. It would be a recession by stealth.

*  *  *

Brandon Smith, Founder of Alt-Market.com, notes that it is also important to point out that the REAL economic data on employment, GDP, etc. shows aggressive declines. 

Government data on employment is utterly rigged to the upside, as they continue to ignore around 95 million working age Americans without jobs.  If these people were counted (as they were during the Great Depression), the unemployment rate would be closer to 25%.  If GDP were calculated as it was during the 1980's, then the US would have negative growth for most of 2019 and would already be considered in recession.  Ultimately, the economic crash going on right now will plant its feet somewhere, and right now it is becoming obvious in debt related sectors.  With consumer debt, corporate debt and national debt at historic highs, the crash will spread from debt into everything else...

Tyler Durden Wed, 12/11/2019 - 10:27
Published:12/11/2019 9:41:50 AM
[Markets] Stocks tick higher as Wall Street awaits key Fed policy update U.S. stocks are slightly higher Wednesday as investors turn their attention to a Federal Reserve policy update later in the session while waiting for news of progress on China-U.S. trade talks Published:12/11/2019 9:41:50 AM
[Markets] Apple stock price target raised by Evercore on expected return to growth in fiscal 2020 Apple Inc. will return to growth in fiscal 2020 and beat earnings estimates for the December quarter following a robust holiday season for AirPods Pro and iPhone 11, Evercore said Wednesday, as it raised its stock price target to $305 from $275. That puts the target in the top tier of analysts on FactSet, where just six of 36 analysts have a target of $300 or higher. Adobe estimates that AirPods were top seller on Black Friday, while Bloomberg has separated reported that AirPods Pro demand exceeded expectations, analysts led by Amit Daryanani wrote in a note to clients. Evercore rates Apple as outperform. "In addition, the iPhone 11 will outperform relatively low expectations as the lower price has been particularly well received in China," said the note. "Also, we think the uptick in carrier promotions could bolster performance in Americas." Looking ahead to next year, Evercore is expecting revenue to grow about 6% as strength in wearables and services offsets declining revenue in other product lines. Apple shares were up 0.8% Wednesday and have gained 72% in 2019, while the S&P 500 has gained 25% and the Dow Jones Industrial Average , which counts Apple as a member, has gained 20%. Published:12/11/2019 9:09:09 AM
[Markets] The Dow has reversed course and stocks are now higher across the board The Dow has reversed course and stocks are now higher across the board Published:12/11/2019 9:09:09 AM
[Markets] S&P 500, Nasdaq open higher; Dow hit by Boeing, Home Depot Published:12/11/2019 9:01:10 AM
[Markets] Extreme weather seen impacting oil prices in 2020 as well as geopolitics Extreme weather events may have as much impact on world oil supply, demand and prices as geopolitical risks in 2020, according to S&P Global Platts annual outlook.
Published:12/11/2019 9:01:10 AM
[Markets] Watch Live: Inspector General Michael Horowitz Testifies After FISA Report Release Watch Live: Inspector General Michael Horowitz Testifies After FISA Report Release

Following Monday's release of the long-awaited FISA report on FBI abuses while investigating the Trump campaign, during the 2016 US election, Inspector General Michael Horowitz is testifying before the Senate Judiciary Committee on Wednesday.

Watch:

Horowitz's report found "significant inaccuracies and omissions," yet despite the fact that the FBI's elite made numerous errors and harbored extreme animus against Donald Trump, none of that affected their investigation.

 

Tyler Durden Wed, 12/11/2019 - 09:56
Tags
Published:12/11/2019 9:01:10 AM
[Markets] Biden Quietly Telling Aides He'd Only Serve One Term Biden Quietly Telling Aides He'd Only Serve One Term

Joe Biden may regularly forget what state he's in, or what college he went to, or how long Donald Trump has been in office  - but don't worry; the man whose finger would be on the button is privately telling people he'd only serve one term.

According to Politico, the 77-year-old Biden has 'quietly' signaled to aides that he would not seek reelection at the end of his first term, according to four people who regularly talk to Biden and spoke on condition of anonymity - calling the prospect of Biden running in 2024 as the first octogenarian president 'virtually inconceivable.'

"If Biden is elected, he’s going to be 82 years old in four years and he won’t be running for reelection," said one prominent adviser to the campaign.

The adviser argued that public acknowledgment of that reality could help Biden assuage younger voters, especially on the left, who are unexcited by his candidacy and fear that his nomination would serve as an eight-year roadblock to the next generation of Democrats.

By signaling that he will serve just one term and choosing a running mate and Cabinet that is young and diverse, Biden could offer himself to the Democratic primary electorate as the candidate best suited to defeat Trump as well as the candidate who can usher into power the party’s fresh faces. -Politico

"This makes Biden a good transition figure," said the adviser. "I'd love to have an election this year for the next generation of leaders, but if I have to wait four years [in order to] to get rid of Trump, I'm willing to do it."

Another top Biden adviser said: "He’s going into this thinking, ‘I want to find a running mate I can turn things over to after four years but if that’s not possible or doesn’t happen then I’ll run for re-election.’ But he’s not going to publicly make a one term pledge."

In other words - yes, Biden is visibly senile - but trust four anonymous advisers and Politico that he would only stick around for one term. Anything to get Trump out of the White House.

According to the report, pressure has mounted in recent weeks within elite Democratic circles over Biden's age and whether to address it with a one-term pledge.

Still - not all top Democrats agree. Former Clinton campaign adviser John Podesta called a one-term pledge "a weak play."

"I think who his vice president is will be very important because people will be thinking about that. But I don’t think I would make a one-term pledge. You’ve disempowered yourself as president and I don’t think it helps you as a candidate. It accentuates your weakness. It doesn’t fix it."

Either way, Biden is still the frontrunner as America watches him make weekly gaffes that would disqualify most candidates.

Since Thanksgiving there has been a gradual shift among prominent Democrats once deeply skeptical of Biden’s candidacy. In national polls, Elizabeth Warren, who was on a trajectory to topple Biden, has lost all the gains she achieved since July and fallen to third place. Pete Buttigieg, who has replaced Warren as the hot candidate among white college-educated voters, has shown no evidence that, even as he thrills a subset of the Democratic electorate in Iowa, he can achieve broad appeal among African American and Latino voters. Meanwhile, Sen. Bernie Sanders, who won 43 percent of the primary vote in 2016, has been unable to break out of the mid-teens for most of this year.

Biden’s base of older working-class white and African American voters has been unassailable. A year of national polling of the Democratic primary shows his remarkably consistent support. According to the Real Clear Politics national polling average on Dec. 8, 2018, Biden had 29 percent support nationally. On Dec. 8, 2019, he had 29 percent support.

The greatest threats to Biden’s African-American base have been neutralized. Sen. Kamala Harris has suspended her campaign. Sen. Cory Booker has struggled to qualify for the PBS News Hour/POLITICO Debate, on Dec. 19. Former Gov. Deval Patrick, a pre-Thanksgiving entrant to the race, has barely been heard from and is polling at less than 1 percent. -Politico

That said, while Biden is enjoying a recent boost, his popularity in New Hampshire and Iowa - key states to gauge sentiment, is 'middling' according to Politico, which suggests that poor showings in both states could upend the race.

Biden has also struggled to raise money compared to his three top opponents, Warren, Sanders and Buttigieg. Mike Bloomberg, meanwhile, has bought himself into fifth place with tens of millions of dollars.

"Is 81 years old too old to be president? Yes. Is an eighty-one year-old president standing for reelection likely to be successful? He is not. And is it the right thing to do for the country? No. Biden wouldn’t be running if it were President Jeb Bush or President Marco Rubio. He’s running because it’s an exigent circumstance — Donald Trump. The next president will have to have oppositional virtues to the last president. We have a presidency that is defined by abject selfishness, self-regard and self-interest. So a one-term pledge would be viewed as an act of selflessness, putting the country ahead of any ambition," said one political strategist who spoke recently with one of Biden's closest advisers.

Read the rest of the report here.

Tyler Durden Wed, 12/11/2019 - 09:19
Tags
Published:12/11/2019 8:39:57 AM
[Markets] Deep Dive: Top stock picks for 2020: Making money with midsize firms The mid-cap index has outperformed small- and large-cap indexes in the long run.
Published:12/11/2019 8:39:57 AM
[Markets] Dow falls at opening bell as stocks struggle ahead of Fed meeting Dow falls at opening bell as stocks struggle ahead of Fed meeting Published:12/11/2019 8:39:57 AM
[Markets] Consumer inflation picks up in November, with annual rate hitting a 1-year high Consumer inflation picks up in November, with annual rate hitting a 1-year high Published:12/11/2019 8:09:13 AM
[Markets] Why "This Sucker Is Going Down" Why "This Sucker Is Going Down"

Authored by Charles Hugh Smith via OfTwoMinds blog,

Once the contagion starts spreading, loose money won't put the fires out.

As the nation's political and economic leaders struggled to contain the 2008 financial meltdown, President George W. Bush famously summed the situation up: "If money doesn't loosen up, this sucker will go down."

Eleven years into the loose money recovery, this sucker is finally going down for reasons that have little to do with tight money and everything to do with the inconvenient fact that none of the structural problems have been addressed, much less actually fixed.

We live in a bizarre world dominated by magical-thinking, a world in which the Federal Reserve creating more dollars out of thin air is supposedly the solution to everything, while all the knotty structural problems--unsupportable pensions and entitlements, unsustainable dependence on debt to fund everything from infrastructure to a new iPhone, a sickcare system that is bankrupting the nation, a higher education system that is looting an entire generation for diplomas with marginal market value, a runaway National Security State that burns trillions on unwinnable wars and lies about it--are left untouched because they're, well, difficult, and it's so much easier to say that looser money will solve everything.

Alas, loose money has created a new set of metastasizing problems that will bring this sucker down: widening wealth-income inequality, the only possible result of our system of creating and distributing new money to banks, financiers and corporations; soaring systemic leverage that few see, much less understand; and perhaps most perverse, yet equally unnoticed, loose money has widened the gap between the real economy and the top layer of arcane finance to the point there is literally no connection at all.

The happy story about debt-dependent capitalism is that thriving companies borrow money from our wunnerful banks to invest in new factories, research, software development, etc., hiring millions of top-notch people--top-notch!--at generous salaries to boost productivity and make the entire nation wealthier.

Alas, it's all a fraud. What actually happens is banks "invest" the new money in faster High Frequency Trading (HFT) computers so they can skim even more profit from the rigged "markets." Productivity increase: zero. Social benefits: zero. Economic benefits to the nation at large: zero.

Virtually all the loose money created by the Fed is socially useless financial activity, enriching the few at the top of the wealth-power pyramid who own the financial machinery of repo's, derivatives, FX swaps, leverage, and all the other tricks of the financial trade that has completely disconnected from the real-world economy.

The conventional media constantly hypes the fantasy that trade deals matter, holiday sales matter, employment numbers matter--none of that matters. The big money is made by gaming the financial system, buying regulatory approval, i.e. legalized looting, funneling a few measly millions to craven politicos who have zero understanding of how the nation's financial system actually works, and then running a monstrous skimming operation behind the complexity thickets of "modern" finance, which all boil down to the same toxic concoction that's destroyed economies throughout history:

-- The unlimited greed of those at the top.

-- No real oversight or limits on financial gaming of the system.

-- Abundant central-bank loose money to fund speculative activity in rigged markets.

-- 100% socially useless financial activity.

-- No limits on leverage, so every $1 of financial legerdemain can spawn a $100 dollar bet.

-- Total dependence on debt to fund the government, consumer spending, corporate buy-backs-- everything.

This sucker is going down, and sooner than we think. The Fed can create trillions out of thin air and give it to banks, financiers and corporations, but they can't force them to actually invest in the nation's real economy or even buy the assets the Fed so desperately wants them to buy, i.e. stocks.

The banks and financiers have used the Fed's trillions to enrich themselves for eleven years, and nothing will stop their legalized looting except a collapse of the entire machine. The great karmic irony is they've rigged and gamed the system so rapaciously, absolutely confident there's no end to the loose money, that they've overlooked the increasing fragility of the entire system they've ruthlessly exploited.

Once the contagion starts spreading, loose money won't put the fires out. The idols and false gods (The Fed et al.) will fail most spectacularly, and the karmic fury will not abate until the every last skim and every last con has been consumed.

*  *  *

My recent books:

Will You Be Richer or Poorer? Profit, Power and A.I. in a Traumatized World (Kindle $6.95, print $11.95) Read the first section for free (PDF).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($6.95 (Kindle), $12 (print), $13.08 ( audiobook): Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 (Kindle), $8.95 (print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).

*  *  *

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

Tyler Durden Wed, 12/11/2019 - 08:59
Published:12/11/2019 8:09:13 AM
[Markets] Dow Jones Today Dips On Home Depot Outlook, Tesla Up; Caterpillar's Buy Range Tesla and Photronics were early leaders Wednesday, while Home Depot held back the Dow Jones as markets awaited rate policy news from the Fed. Published:12/11/2019 7:39:03 AM
[Markets] Boeing Slides After FAA Chief Says 737 MAX Won't Return This Year Boeing Slides After FAA Chief Says 737 MAX Won't Return This Year

Exactly one month ago, Boeing stock soared despite the company's dismal earnings because it claimed that 737 MAX deliveries "could" resume in December. We mocked the headfake at the time for the simple reason that not only was the MAX not coming back this year, but it may well never come back now that Boeing has seen its consumer faith crushed after it emerged it had put the bottom line above passenger safety.

Well, moments ago the Dow Jones Index dipped, when Boeing stock - by far its most influential member - slumped 1% after FAA Administrator Stephen Dickson told CNBC that Boeing‘s timeline isn’t FAA’s timeline, and that the MAX' certification would extend in 2020, meaning the plane would not return to operation this year.

Predictably, BA stock slumped even if the move was far less than its surge on Nov 11 on the now refuted rumor the MAX would come back.

There's a reason for the FAA's caution: earlier today the WSJ reported that U.S. regulators decided to allow the 737 MAX jet to keep flying after its first fatal crash last fall, despite their own analysis "indicating it could become one of the most accident-prone airliners in decades without design changes."

The November 2018 internal Federal Aviation Administration analysis, expected to be released during a House committee hearing Wednesday, reveals that without agency intervention, the MAX could have averaged one fatal crash about every two or three years, according to industry officials and regulators. That amounts to a substantially greater safety risk than either Boeing Co. or the agency indicated publicly at the time.

The assessment and related materials raise new questions about the FAA's decision-making in the wake of the Lion Air crash in Indonesia, along with what turned out to be faulty agency assumptions on ways to alleviate hazards.

The FAA's intervention proved inadequate after a second fatal MAX crash, this time in Ethiopia, put the global fleet on the ground and sparked an international controversy over the agency's safety oversight.

And as public outrage is sure to return at both the FAA and Boeing, one can forget about the 737 MAX return to operation any time soon, and perhaps, any time ever.

Tyler Durden Wed, 12/11/2019 - 08:26
Published:12/11/2019 7:39:03 AM
[Markets] Economic Report: Consumer inflation perks up in November as 12-month rate hits a one-year high U.s. households paid more for energy, health care and rent in November, pushing the rate of consumer inflation up to the highest level in a year. The consumer price index rose a sharp 0.3% last month.
Published:12/11/2019 7:39:03 AM
[Markets] "Markets Have Not Priced In Any Bad News": Futures Frozen As Barage Of Risk Events Looms "Markets Have Not Priced In Any Bad News": Futures Frozen As Barage Of Risk Events Looms

US futures are trading flat and European shares fell as the looming China tariff deadline was one day closer and still without resolution, while traders awaited the Fed's policy announcement today at 2pm. The MSCI world equity index eked out a small gain after Asian shares advanced earlier.

Market sentiment was dented on Tuesday evening and the Yuan slumped after Trump Trade Adviser Peter Navarro said he "got no indication" that the U.S. would postpone new tariffs on Chinese goods that are due to take effect on Dec. 15. Navarro’s comments conflicted with reports from the WSJ and Bloomberg that cited people familiar with the trade talks as saying Chinese officials expect President Donald Trump to delay the hike to allow more time for the reaching of an interim deal.

Amid the last minute verbal brinkmanship, China's nationalist tabloid Global Times, tweeted that "The US' brinksmanship in using tariffs as leverage to force #China into giving more ground in #tradetalks will not succeed; Instead, it could prompt a new round of tit-for-tat tariff fights, darkening an already pressured global economy and sparking global stock selloff." However, it failed to impact risk assets.

The White House’s top economic and trade advisers are expected to meet in coming days with Trump over the decision, as the U.S. President now has only days to decide whether to impose tariffs on nearly $160 billion in Chinese goods.

Investors said an initial trade deal was still likely, since it would benefit both Washington and Beijing. “We still believe that the phase-one deal is something that is convenient for both the presidents on the political and economic side,” Alessia Berardi, senior economist at Amundi. “If the tariffs will be implemented it will be a disaster in the short term.”

Amid the uncertainty over trade - the overriding focus for investors through the year - the European Stoxx 600 index fell, then recovered modestly, dragged down by real estate shares, while Asia stocks were mostly higher after White House adviser Peter Navarro said he had no indication that President Donald Trump will do “anything other than have a great deal or put the tariffs on.”

Earlier in the session, Asian stocks advanced, led by utility companies, as investors looked for signals of a possible initial trade deal between China and the U.S. Markets in the region were mixed, with Hong Kong leading gains and Japan retreating. MSCI’s index of Asia-Pacific ex-Japan had earlier risen 0.5%. Hong Kong’s Hang Seng and Australia’s S&P/ASX 200 led gains with 0.7% rises.  The Topix slid for a second day, dragged down by Keyence and Hitachi. The Shanghai Composite Index closed higher for a fifth day of gains, with large banks and insurers among the biggest boosts. China’s top leadership may set the target for economic growth at about 6% for 2020 as they meet this week for their annual policy conclave. India’s Sensex edged up, supported by Housing Development Finance and Kotak Mahindra Bank, as a credit crisis appears to be easing for some borrowers. Indian bonds declined as S&P Global Ratings warned it may lower the nation’s sovereign ratings if economic growth doesn’t recover.

In the Middle East, Saudi Aramco shares surged by a 10% limit above their IPO price in their first day of trading. That gave the extremely illiquid state-controlled oil company a market value of about $1.88 trillion, making it the world’s most valuable listed company.

In addition to trade, investors will be focused on meetings by major central banks starting with the Fed which at its policy meeting later today is widely expected to hold rates steady, with investors watching for changes to its view on the economy and its 2% growth forecast for next year. The Fed’s statement is due at 2pm ET. A surprise when U.S. inflation data are released at 830am would further reduce chances for rate cuts next year.

Then on Thursday, the ECB will hold its first meeting and news conference with Christine Lagarde. “Everything is positioned for the two major central banks to stay accommodative,” Berardi said.

"The markets have become numb to the noise” on trade, Allianz portfolio manager Burns McKinney told Bloomberg TV. "The FOMC meeting, the election in the U.K. and then later this week the December 15 deadline are all factors that I think the markets have generally not priced in any bad news."

The British pound, a high-flier of late, dropped from a seven-month peak after an opinion poll projected a narrower-than-expected victory for the Conservative party in the British election on Thursday. The election is set to decide how the UK will leave the European Union, if at all. The pound fell as low as $1.3107 after a YouGov poll showed the ruling Conservatives heading towards a slimmer majority than was forecast a fortnight ago. YouGov’s research director said the results showed a hung parliament was possible.

Sterling later recovered some of its losses after dropping 1% from its high on Tuesday, when investors were more confident of a Conservative victory that they expect will end uncertainty over Britain’s exit from the EU. It was last trading flat at $1.3151.

Elsewhere, the Bloomberg Dollar Spot Index edged higher, rising for the first time in three days, ahead of the Federal Reserve’s policy decision. The krona rose versus all major peers and reached a seven-month high against the euro after Sweden’s November inflation print beat estimates and all but guaranteed that the Riksbank will make history next week, as policy makers look set to end half a decade of negative interest rates. The euro was last down 0.8% against the crown at 10.454, leaving the Swedish currency at its strongest since late April.

The yuan weakened after Navarro said he “got no indication” that the U.S. would postpone new tariffs on Chinese goods that are due to take effect on Dec. 15. The Chinese currency declined as much as 0.17% in the offshore market on Wednesday and weakened up to 0.10% onshore. Stephen Chiu, Asia FX and rates strategist at Bloomberg Intelligence, expects the impact of trade war developments on the yuan to diminish as investors get used to twists and turns around the negotiations. "Even if there is no delay in tariff increase, I don’t think the yuan will rise too much. It should be capped at 7.1 per dollar."

In commodities, Brent futures fell by 52 cents, or 0.8%, to $63.82 per barrel by late morning, after industry data showed an unexpected build-up in crude inventories in the United States.

Looking at the day ahead, the focus will clearly be on the aforementioned Fed meeting this evening. There is also important data with the November CPI report due out in the US just after lunch, while the November monthly budget statement is also scheduled for tonight. There is no data of note in Europe today. Elsewhere, OPEC is due to issue its monthly oil market report.

Market Snapshot

  • S&P 500 futures down 0.1% to 3,132.75
  • STOXX Europe 600 down 0.2% to 404.38
  • MXAP up 0.3% to 165.50
  • MXAPJ up 0.6% to 527.88
  • Nikkei down 0.08% to 23,391.86
  • Topix down 0.3% to 1,714.95
  • Hang Seng Index up 0.8% to 26,645.43
  • Shanghai Composite up 0.2% to 2,924.42
  • Sensex up 0.2% to 40,321.80
  • Australia S&P/ASX 200 up 0.7% to 6,752.64
  • Kospi up 0.4% to 2,105.62
  • German 10Y yield fell 1.4 bps to -0.309%
  • Euro down 0.05% to $1.1086
  • Brent Futures down 0.4% to $64.06/bbl
  • Gold spot up 0.2% to $1,466.61
  • U.S. Dollar Index up 0.09% to 97.50
  • Italian 10Y yield fell 3.2 bps to 0.897%
  • Spanish 10Y yield fell 2.4 bps to 0.437%

Top Overnight News

  • While Jerome Powell is expected to reinforce the signal that policy is on hold at the central bank’s meeting on Wednesday, some of his colleagues may be looking ahead to when they should hike again
  • Boris Johnson and Jeremy Corbyn embark on a whistle- stop tour of key districts, after a hotly anticipated opinion poll showed the Conservative Party’s lead has narrowed ahead of Thursday’s U.K. election. The YouGov survey of more than 100,000 voters suggested Johnson would win a majority of 28 seats, down from 68 estimated two weeks earlier
  • The unprecedented level of calm pervading global currencies is pushing investors to rethink their approach to the FX market. Morgan Stanley Investment Management has pared its foreign-exchange exposure, and Russell Investments Ltd. is focusing on value, and is forsaking major currencies in favor of those from developing economies
  • Those close to EU chiefs privately acknowledge that a strong Johnson victory on Dec. 12 will mean the U.K.’s long-drawn-out departure from the European Union will finally happen, according to more than half a dozen EU officials speaking on condition of anonymity because the issue is delicate
  • The Tories will win 339 of the 650 seats in the House of Commons, Labour 231, the Scottish National Party 41, and the Liberal Democrats 15, according to a YouGov forecast on Tuesday
  • Chinese officials expect President Donald Trump to delay a threatened tariff increase set for Sunday, giving more time to negotiate an interim trade deal. However, late Tuesday, White House Trade Adviser Peter Navarro said he had no evidence that tariffs set to take effect on Dec. 15 won’t take effect
  • Bank of Japan officials see a sizable impact from stimulus measures launched by Prime Minister Shinzo Abe last week, raising the likelihood that the central bank will upgrade its economic forecasts for the first time in a year next month, according to people familiar with the matter
  • House Democrats embraced the U.S.-Mexico-Canada trade agreement after securing key revisions and announced plans to vote on the deal next week, putting Trump closer to a political win as he heads into the 2020 election
  • New Zealand’s government will increase spending on infrastructure in an effort to boost economic growth, resulting in a budget deficit this year and smaller surpluses thereafter
  • Oil retreated from its highest close in almost three months after an industry report showed American crude inventories expanded last week, adding to concerns over weakening demand
  • House Democrats delivered two tightly crafted articles of impeachment against Trump on Tuesday that urged his removal as president for abusing the power of his office and keeping Congress from exercising its duty as a check on the executive branch

A non-committal tone persisted across Asia-Pac equity markets following conflicting US-China tariff reports and as this week’s risk events drew closer beginning with the FOMC meeting due later today. The latest trade headlines have been varied as initial reports suggested that US and Chinese officials are planning for a delay of December 15th tariffs as they negotiate on agricultural purchases, although President Trump was said to remain undecided and both NEC Director Kudlow and White House Trade Advisor Navarro have leaned back from the notion of a tariff postponement. This has resulted to mixed trade for ASX 200 (+0.7%) and Nikkei 225 (U/C) with Australia lifted by outperformance in the defensive sectors and price action in Tokyo kept to within a tight range as sentiment among large firms deteriorated to a 3-year low, while Hang Seng (+0.7%) and Shanghai Comp. (+0.2%) were predominantly indecisive on the differing trade signals, with stronger than expected Chinese financing and lending data doing little to spur upside as participants also contemplated over continued PBoC liquidity inaction and regional growth downgrades from ADB which forecasts growth for the world’s 2nd largest economy to slip below 6% next year. Finally, 10yr JGBs saw a resumption of the recent declines following similar pressure in T-notes, while demand was also subdued by a lack of BoJ buying with the central bank only in the market today for treasury discount bills.

Top Asian News

  • BOJ Is Said to Expect Sizable Impact From Abe’s Economic Package
  • China’s Experimental Cancer Cure Offers Hope and Hidden Dangers
  • Jitters Over China’s Local Defaults Start to Spread Offshore
  • Investors Seen Flocking to TSMC Over Samsung for Reliable Payout

A choppy session for European equities thus far [Eurostoxx 50 -0.2%] following on from a lacklustre APAC session heading into key macro risk events. Broad-based losses are seen across the board, albeit the FTSE 100 (-0.2%) is largely moving in tandem with the Pound ahead of tomorrow’s UK general election and after the latest MRP polling from YouGov. Sectors are mixed with Utilities propped up in part by Germany’s E.ON (+1.6%) and RWE (+0.7%) amid source reports that Germany will allow the companies to keep their existing carbon emissions certificates due to coal unit shutdowns. That said, the sector’s defensive nature could also be providing some support. Meanwhile, the IT sector is underperforms, potentially on trade jitters amid conflicting reports and rhetoric from both the US and China sides. In terms of individual movers – JD Sports Fashion (-8.7%) shares tumbled at the open after its top shareholder cut its stake in the company but retained his position as major shareholder. Credit Suisse (-0.5%) remains modestly pressured after it revised down its 2020 ROTE guidance to around 10% vs. Prev. 10-11%. On the flipside, Tullow Oil (+5.6%) continues to nurse its wounds following its recent 70% slump, whilst Inditex (+2.7%) is buoyed post-earnings, which showed an YY gains in net profit, net sales, EBITDA and gross profits.

Top European News

  • BVB Shares Jump, Ajax Tanks Following Champions League Drama
  • As Just Eat Battle Rages On, Prosus Wins Amsterdam Sideshow
  • Swedish Inflation Data ‘Cements’ Bets That Rate Hike Is Coming
  • Europe Readies World’s Cleanest Revamp of Economy in Green Deal

In FX,  Not quite polar opposites, but contrasting fortunes for the Swedish Krona and Sterling in wake of inflation data and the final pre-UK election poll from YouGov, as the former eclipsed market expectations and matched Riksbank forecasts to effectively seal a repo rate hike next week. However, the MRP survey implies a much tighter result this Thursday than the previous findings, with a projected Tory majority of 28 seats vs 68 seats around the end of November and even that prediction subject to the usual margins of error. In response, Eur/Sek has recoiled sharply to test 10.4500 support vs highs close to 10.5400 and 10.5800+ on Tuesday, while Cable has pulled back from just over 1.3200 to circa 1.3140 after probing bids ahead of 1.3100 and Eur/Gbp bounced through 0.8450 at one stage before fading.

  • AUD/NZD - A similar story down under where the tables have turned somewhat on the back of a reversal in cross flows following the latest NZ Half Year Fiscal update revealing a bigger cash balance shortfall and fresh Nzd12 bn budget allocation for infrastructure. Nzd/Usd has lost momentum after a knee-jerk rally to around 0.6555 and Aud/Nzd rebounded from sub-1.0400 towards 1.0450 to help Aud/Usd maintain 0.6800+ status even though RBC joined the chorus for more RBA easing and QE.
  • JPY/CAD/CHF/EUR - All narrowly mixed against the Greenback as the DXY continues to straddle the 97.500 level in relatively muted/nervy trade awaiting the FOMC, with the Yen meandering between 108.67-84 parameters, Loonie trapped in a 1.3227-39 range and Franc pivoting 0.9850. Elsewhere, the Euro is still looking heavy or toppy into 1.1100 and perhaps conscious that a hefty 1.6 bn option expiries reside from the big figure to 1.1110, not to mention the fact that tomorrow is ECB (and SNB) day.
  • EM - Divergence also a theme in terms of Rand outperformance compared to Lira underperformance, as Usd/Zar pares back from almost 14.8200 in wake of in line/softer than previous SA CPI on less Eskom load-shedding before attention turns to retail sales data, but Usd/Try hovers around 5.8000 due to renewed US-Turkey sanctions and diplomatic tension rather than a slightely narrower than anticipated current account surplus.

In commodities, mixed trade in the commodities complex with WTI and Brent futures retreating from 12-week highs following last night’s weekly API figures – with crude headline printing a surprise build of 1.41mln barrels vs. expected draw of 2.8mln. Further, the internals came in mostly bearish with distillates and gasoline showing higher-than-forecast builds whilst Cushing printed a deeper-than-expected draw. Traders will be waiting for confirmation from the EIA later today. Meanwhile OPEC’s monthly report (to be released at 13:00GMT) may garner some attention given the EIA STEO left its global oil demand forecast unchanged and included a downward revision to their 2020 US oil supply growth forecast. ING is not surprised by the downward revision given the slowdown seen in US rig activity. In terms of a more macro picture, crude markets will be vulnerable to any US-China headlines amid the contradicting reports regarding tariffs due to be implemented this Sunday. Aside from that, the FOMC’s latest monetary policy decision later could provide the complex with some sentiment-driven action. Today also marked the first trading session for Saudi Aramco, whose shares opened at SAR 35.2 vs. and IPO price of SAR 32.0, hitting limit up after rising 10% and surpassing its earlier valuation of USD 1.7tln. Looking at metals, spot gold prices remain supported ahead of the aforementioned events, with the yellow metal surpassing its 21DMA (USD 1465.50/oz) with eyes on yesterday’s high at USD 1469.15/oz. Copper prices continue to rise and have topped 2.75/lb with its 100 DMA residing around 2.8060/lb. Finally, nickel prices came under pressure in early APAC trade after inventories spiked 21% YY, the largest increase since 2008, but despite this the metal reversed course with the only pertinent news being Indonesia doubling royalties for the ore to 10% - making it more expensive for buyers, thus some front-loading effects may have been priced in.

US Event Calendar

  • 7am: MBA Mortgage Applications, prior -9.2%
  • 8:30am: US CPI Ex Food and Energy MoM, est. 0.2%, prior 0.2%; CPI Ex Food and Energy YoY, est. 2.3%, prior 2.3%
  • 8:30am: US CPI MoM, est. 0.2%, prior 0.4%; CPI YoY, est. 2.0%, prior 1.8%;
  • 8:30am: Real Avg Weekly Earnings YoY, prior 0.95%; Real Avg Hourly Earning YoY, prior 1.2%
  • 2pm: FOMC Rate Decision (Upper Bound), est. 1.75%, prior 1.75%
  • 2pm: Monthly Budget Statement, est. $206.2b deficit, prior $100.5b deficit

DB's Jim Reid concludes the overnight wrap

Markets are focused on navigating the last couple of weeks of 2019 for now with the next hurdle being the FOMC meeting tonight although in fairness it’s probably hard to get too excited given that the Fed is firmly on hold for now with the recent data helping to underscore that position. Markets have priced that in and the view from our economists is that the meeting statement should largely mirror the communique from the last meeting.

We will also get the latest summary of economic projections although our colleagues also expect only very modest changes, most notably downgrades to the median views on inflation and long-run unemployment. The dot plots should also adjust 25bps lower to account for the rate cut in October and still show an upward drift over time to a neutral level that is somewhat lower. That leaves Powell’s press conference which our team believe will echo recent remarks, which indicate that the Committee sees policy in a good place barring a "material reassessment" to the outlook. In this context, the team expect the Chair's comments to reflect his implicit message from October that, while the bar to cutting rates is high, the bar for hiking is even higher.

A reminder that the meeting outcome will be at 7pm GMT/2pm EST, while prior to that we’re also expecting the November CPI report in the US where the consensus expects a +0.2% mom core reading. Back to markets where the main story yesterday was the WSJ reporting that US and China negotiators are planning for a delay of tariffs due to kick in from this Sunday. In fairness this did appear to be what markets had expected even if there were one or two doubts in recent weeks with the story also suggesting that Chinese and US officials “don’t have a hard deadline”. However to add some confusion to the picture, the White House’s Kudlow said later on that the December 15th tariffs are “still on the table” and overnight Commerce Secretary Ross has said that he has “no indication” that the President will do anything other than “have a great deal or put the tariffs on”.

The mixed messages resulted in a bit of a directionless session for US equities with the S&P 500 ebbing between gains and losses before ultimately finishing -0.11% on lower than average volumes. The NASDAQ and DOW closed -0.07% and -0.10% respectively while the VIX ended just below 16. Prior to this in Europe the STOXX 600 had closed -0.26% albeit off the lows for the session. Bond markets weren’t much more exciting with 10y Treasury yields up +2.3bps and yields in Europe up a similar amount. The exception were BTPs which ended -3.4bps lower.

The picture isn’t a whole lot clearer in Asia this morning. We’ve seen small gains for the Hang Seng (+0.33%) and Kospi (+0.34%) offset by a mixed performance for bourses in China (Shanghai Comp +0.12%), CSI 300 -0.04%) and a small loss for the Nikkei (-0.18%) We should note that after we went to print yesterday November credit data in China was broadly better than expected which combined with the recent bounce in PMIs should be supportive for the growth narrative.

Also out last night was the last YouGov MRP survey with the results showing the Conservatives to win 339 seats and therefore giving a majority of 28 seats, versus 231 for Labour. The previous iteration of the poll showed the Conservatives with a lead of 68 seats so the forecasted lead has been cut in half which makes things a little more interesting ahead of the vote tomorrow. Sterling dropped as much as -0.81% after the poll was released although has recovered slightly as we go to print to trade at $1.314.

The other news yesterday was mostly political. As expected the US, Canada and Mexico all agreed to sign the USMCA with House Ways and Means Panel Chairman Neal saying that it is likely that the pact will be voted on next week. Meanwhile in the US the Democrats announced two articles of impeachment against President Trump on abuse of power and obstruction. Both of those developments caused barely a ripple in markets.

As far as the data was concerned yesterday, the highlight in Europe was an improving ZEW survey in Germany. Indeed the December current situation component improved 4.8pts to -19.9 which bettered expectations for -22.0. That matches the September level while the expectations component improved a more notable 12.8pts to +10.7 (vs. +0.3 expected) which puts it back at the highest level since February 2018.

The hard data was a bit more mixed though with October industrial production surprising to the upside in France (+0.4% mom vs. +0.2% expected) but to the downside in Italy (-0.3% mom vs. -0.2% expected). In the UK the data also disappointed (+0.1% mom vs. +0.2% expected) while the October monthly GDP print of 0.0% was also weaker than expected (+0.1% mom expected). Adding to the pain for the UK was the much wider than expected trade deficit, albeit likely impacted by stockpiling.

Finally in the US the final Q3 readings for nonfarm productivity and unit labour costs were both revised down, to -0.2% qoq (from -0.1%) and +2.5% qoq (from +3.4%) respectively. The latter had been sending a firmer inflation message ahead so the downward revision falls closer in line with more muted inflation indicators from other leading indicators.

Finally to the day ahead, where the focus will clearly be on the aforementioned Fed meeting this evening. There is also important data with the November CPI report due out in the US just after lunch, while the November monthly budget statement is also scheduled for tonight. There is no data of note in Europe today. Elsewhere, OPEC is due to issue its monthly oil market report.

Tyler Durden Wed, 12/11/2019 - 08:00
Published:12/11/2019 7:09:09 AM
[Markets] Bond Report: Treasury yields hold ground before Fed policy update U.S. Treasury yields show little direction in early Wednesday as traders look forward to parsing the Federal Reserve’s policy statement and interest-rate projections.
Published:12/11/2019 7:09:08 AM
[Markets] Aramco Stock Soars Limit Up In Debut After Saudis Force Locals To Buy Aramco Stock Soars Limit Up In Debut After Saudis Force Locals To Buy

Is Jamie Dimon about to get the old bonesaw for leaving $180BN on the table?

Saudi Arabia's oil company Aramco soared 10% limit up on its first day of trading, reaching a valuation of $1.88 trillion, higher than any other publicly traded company in the world. This means that after pricing its IPO at $1.7 trillion, Jamie Dimon left about $180 billion on the table, which will hardly impress the Crown Prince.

The record valuation reflects an oversubscribed book of mostly local investors who bought shares on the Saudi Tadawul stock exchange after they were forced by Riyadh to pump the stock. 

Aramco only sold a tiny 1.5% sliver in the company, meaning that the kingdom and Public Investment Fund of Saudi Arabia (PIF) could easily manipulate the price with such a small fraction of the stock public. Aramco listed on the Tadawul exchange because of other international exchanges and their investors found it hard to value the oil company near the $2 trillion levels. 

"They have had to launch the IPO on their own stock exchange as the valuation was unlikely to be achieved elsewhere," said John Colley, associate dean at Warwick Business School in the U.K, who spoke with Reuters

Colley said the IPO pump is likely buyers affiliated with the kingdom.   Aramco sold .50% of its shares to individual retail investors, many of whom were Saudi nationals, financially incentivized by the kingdom. The remaining 1% were domestic institutional investors and other financial institutions from surrounding countries. 

Reuters noted that Aramco would be offering a dividend of at least $75 billion in 2020 to entice investors to hold. Also, investors who hold for more than six months could be rewarded with up to 100 bonus shares. 

Saudi Arabia's central bank doubled leverage for retail investors ahead of the IPO. 

State investment funds, like Public Pension Agency and PIF's Sanabil Investments unit, are among domestic institutions who were buying shares in the open market, reported Financial Times, adding that wealthy Saudi families were ordered by the kingdom to purchase stock.

As the FT reported ahead of the IPO, Saudi Arabia was "persuading" local institutions and wealthy families to buy shares in Saudi Aramco after its initial public offering, as part of a plan to drive up the stock price: the focus was to reach company’s $2t targeted valuation, and as of this morning, the company is more than halfway there from $1.7 trillion.

Families have been asked to pledge further funds, one unidentified adviser to families say

State investment funds were also "encouraged" to buy shares.

Public Pension Agency, the Public Investment Fund and the PIF’s Sanabil Investments unit are among institutions likely to be called on to support the shares once they are trading, FT reports

Aramco declined to comment; PPA did not respond to FT’s requests for comment, PIF denied it would intervene to support the price although clearly that's precisely what it was doing this morning.

The result of this massive pump spurred by the kingdom, which sent shares soaring by the 10% limit on opening day, was Mohamed bin Salman's attempt to catapult Aramco's valuation over the $2 trillion level.

"Aramco should easily get to the $2 trillion valuation as soon as tomorrow; there is plenty of appetite for it," Marie Salem, the head of institutions at Daman Securities in Dubai, told Bloomberg

The Aramco IPO proceeds ($25.6 billion) will be used by Crown Prince Mohammed bin Salman (MbS) to fund his Vision 2030 initiative and transform the Saudi economy away from oil and gas. 

As MbS and Aramco can claim fame to the world's largest IPO, there was very little participation from foreign institutions, hence why the kingdom incentivized domestic funds and citizens to buy the stock on the day of the IPO.

Monica Malik, the chief economist at Abu Dhabi Commercial Bank, told Reuters while Ice Brent Crude futures trade around $63-$64, the kingdom needs about $87 per barrel to balance its budget.

And one day before the IPO, the finance minister of Saudi Arabia Mohammed al-Jadaan told CNBC's Hadley Gamble that he rejected claims that the kingdom is running out of money. 

"No we are not running out of money," al-Jadaan said. 

Last month, former director of the Central Intelligence Agency (CIA) David Petraeus told CNBC that he believed Saudi Arabia is "gradually running out of money," which could explain why Aramco was rushed to IPO. 

Sustainability of the Aramco IPO is questionable considering international participation is weak, and the kingdom not only forced domestic buyers to load up as much as they could but also were told to use leverage. 

Macroeconomic headwinds of a slowing global economy, dropping Chinese demand and declining fuel consumption across the world could put down pressure on oil prices heading into the new year, but none of that matters because the kingdom has orchestrated one of the most significant one day stock pumps the country or maybe the world has ever seen. 

Tyler Durden Wed, 12/11/2019 - 07:12
Published:12/11/2019 6:53:04 AM
[Markets] In One Chart: ‘Gundlach ratio’ suggests bond yields may rise Anyone who has followed Jeffrey Gundlach, the chief executive of DoubleLine and the so-called bond king, knows he likes one market-based predictor for bonds.
Published:12/11/2019 6:53:03 AM
[Markets] Need to Know: There’s a huge change coming from the Fed (just not today) The really big news coming from the Fed is likely to be delivered in January, and it will have an impact longer than just a day.
Published:12/11/2019 6:09:11 AM
[Markets] Jersey City Mayor Says Gunmen In Deadly Attack Targeted Jewish Grocery Jersey City Mayor Says Gunmen In Deadly Attack Targeted Jewish Grocery

Despite early reports insisting that there was no evidence linking the two shooters who engaged in an hours long gun-battle with police in Jersey City yesterday with any existing hate groups, the city's mayor changed his tune Tuesday night.

Jersey City Mayor Steven Fulop tweeted Tuesday night that authorities have come to the conclusion that the attacks "targeted" the Jewish community, based on their ongoing investigation into the shootout that left three civilians, a detective, and the two suspects dead.

Fulop added that "due to an excess of caution," businesses in that area might notice an increased police presence in the coming days and weeks.

Fulop added that his office has been in "close contact" with the Jewish community in the city.

Following Fulop's lead, NYC Mayor de Blasio also condemned the attack and railed against anti-Semitism in a series of tweets:

DeBlasio also ordered police to remain on "high alert", even though there were no attacks in NYC. On an otherwise quiet Tuesday, gunshots erupted in the streets. Detective Joseph Seals was killed in the gun battle that kicked off at about 12:30 pm, when police responded to reports of gunfire near the Jewish grocery on Martin Luther King Jr. Drive.

The preliminary investigation suggests Seals, a 39-yearr-old father of five, was killed while trying to interdict "the bad guys" at a cemetery on Garfield Avenue, said Jersey City Police Chief Michael Kelly.

It’s not clear what Fulop meant when he said the store was “targeted,” but Kelly said earlier Tuesday the shooting was not believed to be terror related.

Aside from Seals, three civilians inside the supermarket, along with both suspects, were killed in the shootout.

Tyler Durden Wed, 12/11/2019 - 06:40
Published:12/11/2019 5:49:11 AM
[Markets] Dow Futures Flat Amid China Tariff Uncertainty: Fed Meeting in Focus Wall Street futures edge higher heading into the final Fed policy meeting of the year and the ongoing uncertainty surrounding U.S.-China trade negotiations. Published:12/11/2019 5:08:28 AM
[Markets] Upgrade: The No. 1 credit card in America for every type of spender U.S. News is out with its list of the best credit cards by category, from cash back to travel rewards to business cards and 0% APR
Published:12/11/2019 5:08:28 AM
[Markets] Normandy Meeting Confirms Zelensky Has Zero Friends In Europe Normandy Meeting Confirms Zelensky Has Zero Friends In Europe

Authored by Tom Luongo via Gold, Goats, 'n Guns blog,

It came as no shock to me that the meeting in Paris of the so-called Normandy Four between the leaders of Ukraine, Russia, Germany and Franc ended without any breakthroughs.

The first meeting between Russian President Vladimir Putin and Ukrainian President Volodymyr Zelensky was mostly a get-to-know-you affair.

That’s sad because it was a missed opportunity for Angela Merkel, Emmanuel Macron and Zelensky to announce to the world their independence as actors on the world stage.

But that is definitely not what happened. While it’s true that the group agreed on a number of minor points to begin the healing process between Ukraine, Russia and the European Union, the lack of breakthrough on any of the major issues surrounding these actors speaks louder than anything else.

It is Merkel, Macron and Zelensky that need something from Putin. Germany and France want Russia to rejoin Europe as a full partner. Both are setting the stage to lift the worst of the sanctions next year. It should not be lost on anyone that Crimea was brought up once by Zelensky during the presser and both Merkel and Macron brushed it off.

Crimea is no longer a condition for ending this stalemate.

But that doesn’t mean the U.S. is backing down in Ukraine, even though Trump is beginning to understand just how deep the rabbit hole of corruption goes there.

Putin and Russia are pursuing their own ends and are happy to resolve the issues outstanding with Europe — gas transit, sanctions, the conflict in the Donbass, NATO encroachment, etc. — but only on terms deemed acceptable to them.

Otherwise they will continue stitching Central Asia together with pipelines, power plants and railways to open up trade and commerce. All of that growth will be lost to Europe if they continue to hold Russia, Iran and Turkey at arm’s length because of fear of pissing off the U.S.

Russia is in no position to beg anything from Europe but rather can and will stand as an antipode against the United States. From Russia’s perspective the EU and the U.S. destroyed Ukraine by trying to cleave it from Russia’s sphere of influence in a cynical ploy to pressure Russia geopolitically.

Ukraine was supposed to fall into the EU’s lap, including Crimea, bottling Russia up permanently. Then they could slowly strangle the Russian economy through monopsony leverage over the gas pipelines into Europe.

So, if anything, Putin will hold out for everything at this point, since he knows Merkel and Macron deal from weak hands. Zelensky is simply a pawn trapped between them and the U.S. inside his own country.

The EU has made it exceedingly difficult for Russia to build the pipelines Europe wants, consistently changing the rules of their Gas Directives to make the projects less and less profitable. Some of that is because of U.S. pressure and some of that is the EU’s own arrogance and hubris.

This is what eventually caused Putin to cancel the South Stream pipeline and re-route it through Turkey. The failure of the putsch in Kiev to bring the country into the fold quickly meant that the EU would have to foot the bill for the country’s rebuild.

And since the best parts of it either broke away (the Donbass) or rejoined with Russia (Crimea) adding it to the EU would have been a nightmare in 2014-15 at the height of Merkel’s insane refugee crisis.

This is what prompted the Minsk meetings in the first place. The agreements were a way to freeze the conflict in perpetuity until one side blinked and offload the responsibility of Ukraine onto the U.S. who instigated this mess in the first place.

Here we are five years later and little has changed other than Crimea is now solidly Russian and growing economically. The EU is in serious trouble financially and economically and needs to re-open Russian markets now nearly irretrievably closed to the previous suppliers.

Germany’s politics have fractured to a near breaking point and over the next two years leading up to the next election expect the center to collapse further in favor of the AfD, Alternative for Germany.

This meeting, after the disastrous NATO summit last week, should have been a place for Merkel and Macron to push Zelensky into a solid position on something.

The gas transit contract should have been that thing. It’s something that even the nationalists wouldn’t complain about since it would bring money into the state coffers and shore up European investors that energy supplies into Europe in 2020 wouldn’t be interrupted.

Both Merkel and Macron could have and should have been working to minimize the legal hurdles to getting this deal done; the outstanding awards against Gazprom and Gazprom’s counter-suits which are holding up the final deal.

Putin and Gazprom went into the meeting having made reasonable opening offers. But even with that low-hanging fruit in front of them Merkel and Macron betrayed their political impotence ultimately.

And so did Zelensky because he can’t agree to anything of substance lest he be gutted politically by the nationalists who are threatening civil war if he bows to Russia.

That said, the protests on the Maidan during the meeting were, at best, tepid, so the threat to Zelensky may be less than originally thought and a deal with Gazprom closer than it looks.

The only thing of substance they agreed to was codifying the Steinmeyer formula for implementing the beginning of the Minsk agreements. Poroshenko signed these but never implemented any of them nor sought their ratification as law.

But even then, Zelensky wouldn’t budge on regaining control of the Ukrainian border before the elections in the Donbass took place.

After five years of bloody war to prevent secession, assisted by billions in weapons, mercenaries and personnel by the U.S., U.K. and Canada, asking this of the people in Luhansk and Donetsk was ridiculous.

But that’s obviously what Zelensky was coached to offer. Putin was having none of it, nor should he.

Putin is only interested in returning the Donbass back to nominal control in Kiev as a way to keep the U.S. from losing what’s left of its mind and openly looking for a hot war.

He’d prefer Ukraine to remain a buffer territory between Russia and an increasingly desperate NATO. This way no NATO missiles are on his border. Given the hostility in both the British and U.S. legislatures towards Russia at this point, can anyone blame him for this?

Merkel and Macron came into this meeting to burnish their resumes. Macron let slip what his real agenda was when he referred to Ukraine as an ‘open wound’ which needed to be closed. This was him admitting that the war in the Donbass is a manufactured conflict that benefits no one at the table but which they are powerless to affect.

So, in the end, it was Putin who coached Zelensky through the basics of diplomacy, getting agreement on things like prisoner swaps, ceasefire areas (which never seemed to hold under Poroshenko) and offering a discounted gas price for residential consumers in Ukraine.

And Zelensky, for his part, tried to put the brave face on his isolation by consistently referring the to the Donbass as ‘occupied’ territory as a sop to the nationalists who threaten his presidency. But he couldn’t get any help from Merkel and Macron who both want him to cut a deal with Putin and move on.

Jon Laughland, writing for RT, put it well, saying that Zelensky found out his best friend in Europe was none other than Putin himself. Because…

Putin likes him and wants him to succeed. Moscow knows that Ukraine is bitterly divided between pro and anti-Russian factions and that they take power one after the other. The Orange Revolution in 2004 lasted only 3 years before Viktor Yanukovich won parliamentary elections and became prime minister and then president. The Maidan revolution has lasted 5 years but with the same result; the aggressively anti-Russian party is out of power.

Putin also knows that time is on his side. Even though the U.S. Congress will try to strand the final work on Nordstream 2, leaving it incomplete, there is simply zero chance that Merkel and the Germans will allow that to happen, ensuring that the funds are available to finish the pipeline and deliver gas.

Merkel wants the gas transit deal in place to help right the failed state in Kiev and stop the migration out of the country. And Putin will happily oblige her but only if the EU stands by it as a partner and not treat Gazprom as ‘the help.’

In the end, Ukraine is only important to the U.S. as a pressure point on Russia and its destruction is okay as well since a failed state on Russia’s border is its own reward for the Empire of Chaos.

The big question now is whether Trump will listen to his instincts and allow this Obama-era policy to end or not, impeachment proceedings be damned. His receiving Russian Foreign Minister Sergei Lavrov in the White House the day after this meeting itself is symbolic of the need for a different narrative.

But his tweet after the meeting doesn’t imply that anything’s changed.

The one issue that should dovetail with this meeting is the one not on the list. But Trump will be looking for help from Russia with Iran and North Korea relations which his diplomats and National Security people have sabotaged.

But his hands are tied now that the NDAA is on its way to his desk with the rider of new sanctions on European companies assisting in the completion of Nordstream 2.

So this means, in the end, that Zelensky went to Paris only to find out he still has no friends except the one person he’s not allowed to be friends with, Putin. And that means this situation will grind on without significant movement until the next meeting in March.

*  *  *

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Tyler Durden Wed, 12/11/2019 - 05:00
Published:12/11/2019 4:09:05 AM
[Markets] Credit.com: Don't miss out on these tax breaks if you’re taking care of elderly parents Here are some tax benefits that may help you maximize your tax return as a caregiver for a parent.
Published:12/11/2019 4:09:05 AM
[Markets] World's Rarest Whiskey Collection, Including Two $2 Million Bottles, Slated For Auction Early Next Year World's Rarest Whiskey Collection, Including Two $2 Million Bottles, Slated For Auction Early Next Year

Richard Gooding had one of the most famous whisky collections in history. In fact, before passing away in 2014, he spent years at distilleries in Scotland and at auctions building his 3,900 bottle collection, including some of the rarest bottles in the world.

Two of those bottles could fetch $2 million at auction, according to Bloomberg

At the beginning of next year, his bottles will become the largest private whisky collection to ever hit the auction block. The collection includes extreme rarities from names like Macallan, Bowmore and Springbank.

Collectors continue to drive the prices of old, rare single malt scotch to record prices. Back in October, we noted that Sothby's auctioned off 467 bottles owned by another American collector, including a 1926 Macallan Fine & Rare 60 Year Old, for $1.9 million. 

The Gooding collection will feature two such bottles of the same Macallans, one of which bears a label created by Italian pop art painter Valerio Adami. Only a dozen of the Adami bottles were made and one of them was destroyed in a 2011 earthquake in Japan. 

Becky Paskin, a scotch consultant and writer said: “The amount of people who have even tasted this whisky are few and far between, so to have two of these unicorn bottles in one auction is very exciting.

The auction will be a proud moment for Iain McClune's Whiskey Auctioneer, a company that was founded six years ago in a two-room basement office in Central Scotland. Earlier this year, WA auctioned a 50 year Yamazaki from Japan that fetched 160,500 pounds - a record for his firm that will soon be shattered.

In the upcoming auction, whiskey collectors will be focused on bottles from "lost" distilleries that stopped production long ago, like Dallas Dhu, a one time whiskey-maker in Speyside that closed in 1983. There will also be ample amounts of Bowmore, which was one of Gooding's favorite whiskys. A 1964 Bowmore is expected to attract bids of 12,000 to 17,000 pounds and a 50 year old Springbank from 1919 is expected to bring in 180,000 to 220,000 pounds. 

 “Richard’s mission was to collect a bottle that represented every single distillery,” his wife, Nancy Gooding, concluded.

Tyler Durden Wed, 12/11/2019 - 04:15
Published:12/11/2019 3:38:50 AM
[Markets] Saudi Aramco shares surge past expectations in debut, hitting 10% daily limit According to the stock exchange’s website, Aramco shares most recently changed hands at 35.20 Saudi riyals ($9.39), after debuting at 32 riyals.
Published:12/11/2019 2:39:11 AM
[Markets] 'Deadly Delusions': Europe's Deradicalization Programs 'Deadly Delusions': Europe's Deradicalization Programs

Authored by Giulio Meotti via The Gatestone Institute,

It was a tragedy of good intentions. "Jack Merritt died in the London Bridge attack. Don't forget what he stood for", Emma Goldberg wrote in The New York Times. Merritt was one of the two victims of Usman Khan, an Islamic terrorist who struck on London Bridge on November 29. The other victim was Saskia Jones, a student at the conference targeted by the jihadist. They both dreamed of working to save and protect their murderer.

London had been hosting the fifth anniversary of Learning Together, an event in which ex-prisoners, staff members, students and criminology experts came from all over the country to celebrate the success of their initiative to deradicalize jihadists. Khan had been present as a model of the recovery program. In 2012, Khan was sentenced to prison for plotting to blow up first the London Stock Exchange, then London's Mayor at the time, Boris Johnson, and then the London Eye ferris wheel. According to the Daily Telegraph, Learning Together used Khan as a "case study" on how reintegration programs in society work. He had even written a poem and a note of thanks to the organizers, on a computer made available to him by his tutors.

Merritt, one of the two victims, had worked with him while Khan was behind bars in Cambridgeshire. The pictures from Fishmongers' Hall a few minutes before the terror attack testify as to all the good will of the rehabilitation program. Merritt was the first person who tried to stop Khan during his killing spree. Moments before he attacked, Khan was pictured sitting quietly through the conference session. Many considered him a kind of "star pupil" of the deradicalization program.

Khan had also been quoted in one of Learning Together's newsletters as saying that the group "has a special place in his heart":

"It is more than just an organisation, helping to provide learning of individual academic subjects. For me it's main benefit is bringing people together, through the means of learning. Learning Together is about opening minds, unlocking doors, and giving voice to those who are shut down, hidden from the rest of us. It helps to include those who are generally excluded. This is what Learning Together means to me".

Khan also gave an interview to the BBC, in which he condemned the stigmatization he was suffering:

"I've been born and bred in England, in Stoke-On-Trent, in Cobridge, and all the community knows me and they will know, if you ask them, they will know like these labels what they're putting on us, like terrorist, this, that, they will know I ain't no terrorist".

The latest attack in London was a lethal mix of religious dissimulation and Western naïveté. It also, one hopes, buries all the British illusions of deradicalizing jihadists. As the Times reported, the Behavioural Insights Team (BIT), the so-called "nudge unit" formerly part of the Cabinet Office, examined 33 deradicalization programs across the UK and found that only two were supposedly successful. The British criminologist Simon Cottee has blamed "liberal professors' deadly delusions about curing terrorists".

France had already tried it out. A bipartisan report in the French Senate had condemned the French deradicalization program as a "total fiasco", in the words of Philippe Bas, a senator from the center-right Republicans party. When Senators Esther Benbassa and Catherine Troendlé, both leading the task force, visited the deradicalization center housed in the Château de Pontourny, they found only one resident at the facility.

France also has suffered through the failure of the monitoring mechanism. Many terror attacks in the last few years have been conducted by jihadists who were already flagged in France's special counter-terrorism database: the attack at Christmas market in Strasbourg, the attack at the church in Normandy and the attack at the supermarket in Trèbes, to recall just a few. Recently, a jihadi attack took place inside Paris police headquarters. The terrorist, Mickaël Harpon, worked, in fact, in the unit tracking terrorists.

All over Europe, none of the deradicalization programs has proven effective. "There are not enough reliable data to reach definitive conclusions about the short-term, let alone the long-term, effectiveness of most existing deradicalization programs," a RAND report concluded. It might be beyond the reach of Western states to deradicalize people who, like the London Bridge terrorist, wore a fake suicide vest to invite being killed by the police and becoming a "martyr".

So what does one do with these jihadists? Trusting them can be deadly, as in London. Leaving them in prison might means keeping them as part of "one of the most important places of radicalization". Europe does not have a Guantanamo Bay, a legal limbo which, after 9/11, was useful for the US war on terror. Gitmo could also be useful now, when Europe is dealing with the return en masse of ISIS's foreign fighters.

According to the annual Europol report, 45% of Britons who travelled to Syria and Iraq to join ISIS, have already come back to their home country. Of 714 prisoners former prisoners who were held at Guantanamo Bay, 124 (16.9%) have returned to terrorist activities, while 94 more are suspected by the Defense Intelligence Agency of having returned to terrorism. Deporting these extremists from Europe is extremely controversial for many European politicians. UK Labour Party leader Jeremy Corbyn was filmed protesting the extradition of British terror suspects, including two aides to Osama bin Laden. The UK fought for years with Europe over the deportation to Jordan of the radical imam Abu Qatada.

So, what is Europe's solution? Closing one's eyes and hoping for the best is probably not affordable. Too many people have already died on Europe's streets.

"Now I am much more mature and want to live my life as a good Muslim and also a good citizen of Britain", Khan had written before killing two young British citizens.

A recent UK government report warned that British imams in 48 Islamic schools have been promoting violence and intolerance. It is British society that must be deradicalized, not the jihadists. Britain's best-known hate preacher, Anjem Choudary, recently was released from prison and now walks the streets of London a free man. Recently, a picture surfaced of London Bridge terrorist Usman Khan with his "personal friend", Anjem Choudary. The imam who allegedly radicalized the terrorist who attacked in Paris police headquarters is based in Gonesse and is still free to preach.

Deradicalization works only if it defies this suicidal Western political correctness by tackling the real causes of this kind of terrorism, which are in the Islamic texts. "Kill the unbelievers wherever you find them", says the Koran (9:5). Usman Khan apparently saw Jack Merritt and Saskia Jones as "unbelievers", not as "rehabilitators". If we do not change our rules of engagement, more of the same will follow.

Tyler Durden Wed, 12/11/2019 - 03:30
Published:12/11/2019 2:39:11 AM
[Markets] "Choose Huawei Or Else": Danish Island Chain Threatened By China Over 5G Roll Out "Choose Huawei Or Else": Danish Island Chain Threatened By China Over 5G Roll Out

"Choose Huawei or else" — Denmark's tiny self-governing archipelago of the Faroe Islands has reportedly been threatened by Beijing over plans for Chinese telecom giant Huawei's 5G roll out in the island autonomous region which lies halfway between Norway and Iceland.

The major Danish national daily newspaper based in Copenhagen, Berlingske, broke the story based on a recording of China's ambassador to Denmark making a quid pro quo threat after the Faroe Islands promised 5G by 2020 to all of its citizens.

The threat, involving dangling a free trade agreement before local officials, was reportedly caught on tape, but an ongoing legal battle has prevented its release. 

Huawei advertisement in Copenhagen's popular Nyhavn district — a testament to China's investment in Denmark. Image source: Defense News

According to a rough English translation of the Berlingske exclusive:

The Chinese ambassador to Denmark, Feng Tie, has directly threatened top people in the Faroese government to secure a strategically important contract for Chinese telecom giant Huawei. If the company did not get the contract, the Chinese government would drop a free trade agreement with the Faroe Islands.

This is evidenced by a hitherto unreleased sound recording obtained by Berlingske.

It is the first to reveal of how the Chinese government has linked access to the gigantic Chinese market along with Huawei's European contracts on 5G networks. Externally, Huawei emphasizes being a private company not associated with the Chinese state.

The audio clip of the threat was reportedly blocked by court order soon before a Danish TV station was set to air it. It has not been made public.

The original audio is said to be in possession of Faroese TV station Kringvarp Føroyas and reportedly includes audio of a Chinese official verbalizing a 'deal' before the Faroe Islands' foreign minister.

The Faroe Islands, via Kaptain Kenny Travel

The US ambassador in Denmark, Carla Sands, has long been on record publicly warning against allowing Huawei to establish a the 5G network on the Faroe islands.

Interestingly, she reportedly blocked a former CIA analyst deemed critical of President Trump from giving a keynote address at a Tuesday event entitled "Celebrating NATO's 70th Anniversary" at the Frederiksberg Palace in Copenhagen.

According to NBC, Ambassador Sands personally oversaw the cancellation of the speech:

But before the former CIA analyst could set off for the Scandinavian country Saturday, the Danish Atlantic Council, which was organizing the sold-out event, said it was contacted by the U.S. Embassy.

...The think tank's Secretary General Lars Bangert Struwe told NBC News that the embassy was "concerned over some tweets" from Sloan and "asked us on behalf of the ambassador to cancel him."

The former CIA speaker, who currently is a visiting professor from Vermont’s Middlebury College, was expected to address a sold-out event.

No doubt this means that if the Faro Islands moves forward with Huawei 5G, they can expect major repercussions out of Washington, which would likely be conveyed to Copenhagen first. 

Tyler Durden Wed, 12/11/2019 - 02:45
Published:12/11/2019 2:08:00 AM
[Markets] London Markets: Sterling drops as poll shows Conservative lead slipping ahead of U.K. election The pound fell after the YouGov MRP poll released late Tuesday projected that the Conservative Party would win 339 seats in Parliament, versus 231 for Labour.
Published:12/11/2019 2:08:00 AM
[Markets] Dow Jones Newswires: Credit Suisse to launch up to $1.5 billion share buyback in 2020, returns to rise The Swiss bank targets a return on tangible equity, a key measure of profitability, of roughly 10% next year, up from the more than 8% it expects to achieve this year.
Published:12/11/2019 1:38:39 AM
[Markets] Ukrainian Military After 5 Years Of Warfare Ukrainian Military After 5 Years Of Warfare

Submitted by South Front,

Prior to the Maidan coup of 2014, Ukraine’s military existed in a political vacuum, suffering from benign neglect as well as corruption and other problems plaguing the Ukrainian state. Apart from downsizing, which meant the replacement of divisions by brigades, no modernization was conducted in the years of independence. While Ukraine did contribute to a variety of international missions, even sending a small contingent to Afghanistan and Iraq, these units came from various elite components of the armed forces. The rank-and-file mechanized and armored brigades simply languished under successive Ukrainian governments.

Kiev’s bid to mobilize its military resources after 2014 has enjoyed mixed fortunes. On the one hand, Ukraine did benefit from massive stockpiles of relatively modern weapons left over from the Soviet era. They gave a seemingly inexhaustible supply of weapons and spare parts to flesh out existing units and assemble new ones. In practice, however, neglect of the stored equipment and the limited capacities of Ukraine’s manufacturing and repair infrastructure meant that the losses incurred during the battles of 2014 and 2015 could only partly be replaced, and even then only with inferior equipment.  While Ukraine does have the ability to manufacture heavy and light armored vehicles, it cannot do so in large quantities or without continued supply of certain subsystems from Russia. Indigenously developed vehicles like the Oplot MBT or BTR-3 and -4 APCs seem mainly intended for export to earn badly needed hard currency. Domestic modifications of existing vehicles like the T-64BU Bulat MBT have been discontinued due to the combination of high costs and enduring problems. So as a result of five years of intermittent warfare Ukraine’s tank and APC fleets are smaller, older, more heterogeneous, and more worn out than they were at the beginning of conflict. The shortage of heavy equipment has forced Kiev to resort to organizing motorized brigades with hardly any armored vehicles at all.

NATO’s contribution has not reversed this trend.  There is no evidence any MBTs have been supplied to Ukraine, even from former Warsaw Pact members of NATO who, like Poland and the Czech Republic, have limited themselves to deliveries of small numbers of 2S1 howitzers and BMP-1 troop carriers. Western NATO members likewise have not been showering Ukraine with modern equipment. The most notable deliveries of Western gear were the AT-105 Saxon 4×4 APCs from Great Britain, and the Javelin ATGMs from the United States, the latter of which have not seen combat and appear to be held in reserve. There have been spotty deliveries of small arms, including US copies of RPG-7s, large caliber sniper rifles, Humvees, and even US-made counter-battery radars. The most important aspect of foreign aid has been in the realm of provision of munitions, both for small arms and artillery. The provision of large quantities of artillery shells enabled Ukraine to subject the Donbass to continued bombardment for the last five years. Here the culprits are, again, the former Warsaw Pact members of NATO, with the deliveries being paid for by US military assistance to Ukraine funds.

The fact that the Ukrainian state has de-facto lost its monopoly on violence after the events of 2014 also left a mark on Ukraine’s forces. The military has a powerful competitor in the form of the National Guard which comprises some of the most ideological neo-Nazi elements in Ukraine, and which amounts to a state within a state under the command of Arsen Avakov. The fact that Avakov is one of the few high-level luminaries from the Poroshenko era to survive into the Zelensky era proves something that has long been suspected, namely that he is an independent player in Ukrainian politics whose subordination to the President is only nominal. Little is known of Avakov’s ties to the West, though here the fact that Western powers have turned a blind eye to Avakov’s arming of neo-Nazis suggests they view him as an insurance policy against Zelensky or any future Ukrainian leader who might “go soft” on Russia. Avakov and his proxies have made it clear on more than one occasion that he would oppose “revanchism” in the form of improved relations with Russia, which makes his political preferences consistent with those of Western hardliners. Zelensky’s humiliating confrontation with Azov Regiment militants, who plainly refused to accept orders from their supposed commander-in-chief, only underscores the weakness of his position. It also means that should Ukraine’s military suffer disproportionately heavy combat losses, it would create a vacuum of power that Avakov’s National Guard would be eager to fill.

For that reason, the seven brigades of the Airmobile Forces, the elite of the Ukrainian military have seen relatively little fighting in the Donbass.  These brigades were built on the basis of Ukraine’s Airborne Forces units, with adaptations to modern warfare including provision of heavy equipment such as T-80BV tanks, BTR-3 and -4 wheeled infantry fighting vehicles replacing the Soviet-era BMDs, and of course self-propelled artillery battalions. They also contain a considerably higher proportion of contract as opposed to conscript soldiers, are without any doubt the most effective units that Kiev commands. They are also quite visible during parades and exercises attended by Western observers. But instead of being on the front lines, two of the seven brigades are stationed close to Kiev, while the rest are spread relatively evenly across Ukraine’s regions, even Western ones where there is little danger of fighting, suggesting their role is mainly internal security. While their ostensible military purpose is to serve in a “fire brigade” role in the event of an LPR/DPR breakout and possibly even a direct Russian intervention, the fact that only one of the seven brigades is anywhere near the Donbass at any one time suggests that their main task is to guard against the potential seizure of power by the National Guard or other militants.

The political divisions, corruption, and progressive impoverishment of Ukraine have also left an impact on the armed forces. In order to send Ukrainian brigades to the Donbass to suppress what at that point were peaceful demonstrations, Maidan leaders had to resort to a major purge of the command staff, elevating relatively junior officers with proven nationalist credentials in order to ensure the military would follow orders. The early cases of units refusing to act against the Donbass activists showed that the pre-Maidan military was not mentally ready to shoot at Ukraine’s own citizens.

The problem of motivation has persisted ever since.  Far from every Ukrainian citizen shares Kiev’s political preferences or is interested in shedding blood on behalf of the oligarchs. Those Ukrainians who do serve often do it because military salaries actually compare favorably to what is available in the depressed Ukrainian economy, not to mention the prospect of plunder and/or smuggling in the frontline areas, with the latter being responsible for several clashes among various Ukrainian formations seeking to control this or that smuggling route.  But since the soldiers’ motives tend in the direction of monetary gains, the morale among those frontline Ukrainian units actually on the “line of separation” remains low, with a high rate of non-combat casualties caused by alcohol abuse or careless handling of weapons.  To offset this, Ukrainian commanders appear to have resorted to forming specialized assault units that can be relied upon to undertake difficult missions. The clashes along the line of separation during which Ukrainian forces attempted to seize positions in the “no-man’s land” separating the warring parties were carried out by such assault units usually of company strength. These clashes also showed the strengths and weaknesses of these formations. While capable of launching bold attacks, they are also highly vulnerable to attrition which ultimately forced them to abandon positions they had seized.

Consequently the Ukrainian military can roughly be broken down into three tiers.

  • At the top there are the well-equipped and trained airmobile brigades intended for use as a last resort should a crisis erupt either on the front lines or on the home front.

  • At the bottom there is the grey, unremarkable mass of poorly motivated Ukrainian conscripts serving in poorly equipped and trained mechanized and motorized brigades who perhaps can be relied upon to hold positions on quiet sectors but likely not much else.

  • And in between there are the select assault units among these brigades, as well as volunteer battalions of the National Guard, which can carry out spectacular localized raids but which are unsuitable for sustained warfare.

There is little chance that the situation will change in the foreseeable future. Ukraine cannot afford a professional, all-volunteer force large enough to meet its requirements.  It also cannot afford modern weapons in large quantities. The “praetorian” factor gave Kiev an incentive to concentrate its contract soldiers and best weapons in the elite rapid reaction airmobile brigades, instead of using them in leadership positions among the ordinary mechanized and motorized brigades. While this means a rather dysfunctional military of radically differing capabilities, it is adequate to Kiev’s perception of threat. The “fire brigades” could probably handle a breakout threat by LPR/DPR forces. The Russian military is unlikely to involve itself in force except in cases of dire danger to LPR/DPR posed by a major Ukrainian offensive which Kiev so far has been unwilling to launch for fear of a new round of heavy personnel and material losses. Last but not least, Kiev appears to be aware that the outcome of the Donbass crisis has more to do with Moscow and Washington than with Kiev’s military modernization efforts.

Tyler Durden Wed, 12/11/2019 - 02:00
Published:12/11/2019 1:10:56 AM
[Markets] As Prices Skyrocket, China Claims It Doesn't Need US Pork To Ensure Domestic Supply  As Prices Skyrocket, China Claims It Doesn't Need US Pork To Ensure Domestic Supply 

The Global Times is out with a new opinion piece on Tuesday morning, stating how China will expand its pork imports with Brazil rather than the US. 

We've been covering this trend for the last several months, while the Trump administration continued to promote headlines indicating China was buying massive amounts of agriculture products from the US, including pork and soybeans. But as we noted, this wasn't the case, and China abandoned US markets for Brazil. 

In early Nov., China signed the first-ever trade deal with Brazil to start receiving shipments of swine offal, or organ meats (hearts, tongues, stomachs, and entrails).

BS SA and BRF SA are the Brazilian meat companies that will start sending pig byproducts to China. 

As we've noted in the past, the US has likely lost its label as the top producer in supplying China with agriculture products because of the trade war, which has led to a decoupling of both economies and forced China to head to South America for new sourcing channels. 

China's "pig Ebola" wiped out about half of the country's breeding pig population so far this year, forcing pork spot prices to hyperinflate, which resulted in the consumer price index jumping 4.5% Y/Y in Nov., well above the 4.2% consensus expectation, and the highest annual increase since 2001.

The pig shortage sent the country's food inflation rate to a record +19.1% in November from +15.5% in October, primarily on higher inflation in fresh vegetable and pork prices. 

To prevent further socio-economic unraveling spurred by soaring food inflation, China had to act quick, and that's why they've started sourcing pigs from Brazil to fill the gap in the pork deficit. 

In other reports, we noted that China typically sources most of its soybeans from the US between October and January, though that wasn't the case this year. 

Earlier this week, we produced a map showing all dry bulk, general cargo, and other dry vessels carrying agriculture products (fertilizers, grains, oil/oilseeds, meals/feeds/pulses, softs, and other agriculture products) across the world.

Several significant trends were spotted on the map. The first is how a massive flow of vessels are moving back and forth from Brazilian and Argentinean ports to Europe and China. The second observation is the muted activity on either coast of the US. 

And maybe there's some validity to the Global Times opinion piece since it appears China has gone elsewhere for its agriculture needs. 

Still, if there were crop failures or any livestock disease outbreaks in South America, China would have to renter US markets for pigs and soybean. 

Tyler Durden Wed, 12/11/2019 - 01:00
Published:12/11/2019 12:09:54 AM
[Markets] 2019 Was A Year Of Global Unrest... And 2020 Is Likely To Be Worse 2019 Was A Year Of Global Unrest... And 2020 Is Likely To Be Worse

Authored by Tony Walker via The Conversation,

2019 may well go down as the most disrupted year in global politics since the fall of the Berlin wall in 1989 and the subsequent implosion of the former Soviet Union.

However, the likelihood is that 2020 will be worse, and bloodier.

Conditions that spawned global unrest on every continent in 2019 are unlikely to recede. Rather, they are likely to worsen in the face of a slowing global economy and little sign of causes of disaffection being addressed.

Washington as disruptor

In a word, the world is in a mess, made more threatening by the retreat of the Trump administration from America’s traditional role as a stabilising force.

President Donald Trump has moved the US away from its traditional role of global stabilising force. AAP/EPA/Kevin Dietsch

If anything, Washington is a disruptor in its abandonment of international agreements. These include: the Paris Agreement on climate change and the Comprehensive and Progressive Agreement for Trans Pacific Partnership, previously the Trans Pacific Partnership, aimed at liberalising Asia-Pacific trade. The US has also withdrawn from the Joint Comprehensive Plan of Action (JCPOA) that froze Iran’s nuclear ambitions.

Washington’s defenestration of the JCPOA and its reimposition of tough sanctions on Iran has further destabilised the world’s most volatile region.

All this and more, including an unresolved trade conflict between the US and China, virtually guarantees 2020 will stretch the sinews of a fragile global order.

An evolving US-China technology war and risks of a technological decoupling add to the gloom.

The world is in worse shape than during the GFC

The Global Financial Crisis of 2007-08 was a period of intense uncertainty as a global financial system buckled. But, for the most part, that distress was confined to governments, boardrooms and the offices of international lending institutions.

The GFC did not fuel widespread global unrest as a shell-shocked financial world came to terms with the reality of a regulatory framework that had failed.

In 2019, the story has shifted dramatically.

Mass protests over the skewed benefits of globalisation accompanied by faltering confidence in a democratic model are challenging the assumptions on which a Western liberal capitalist system has rested. Local grievances are fuelling protests against an established order in places as far apart as La Paz in Bolivia and Beirut in LebanonEndemic corruption is looming larger.

If there is a defining issue that is driving popular unrest more or less across the board, it is that people do not feel they are sharing the benefits of an extended period of global economic expansion.

In January, Oxfam reported that the world’s 26 richest individuals owned as much wealth as the poorest half of the global population.

Billionaires grew their combined fortunes by US$2.5 billion (A$3.66 billion) a day in 2018, while the relative wealth of the world’s poorest 3.8 billion people declined by US$500 million a day.

A rich-poor gap is widening across the world to the point where it is no longer possible to argue that an economic growth model that advantages the few is lifting all boats.

Inequality and anger

Something had to give.

Professor Henry Carey of Georgia State University acknowledges differences in causes of localised unrest now sweeping the world, but he also identifies shared characteristics. He writes:

Each protest in this worldwide wave has its own local dynamic and cause.

But they also share certain characteristics: fed up with rising inequality, corruption and slow economic growth, angry citizens worldwide are demanding an end to corruption and the restoration of the democratic rule of law.

Carey makes the useful point that, as the world becomes more urbanised, overcrowded cities are staging points in a global wave of unrest.

In 1950, there were only two mega-cities with populations of 10 million or more – the New York metropolitan area and Tokyo. Today, there are 25 such megacities.

Of a world population of 7.7 billion people, 4.2 billion, or 55%, live in cities and other urban settlements. Another 2.5 billion will move into cities in poor countries by 2050, according to the United Nations.

In other words, poverty, gang crime, drug trafficking and all the other ills associated with an impoverished urban environment will become less manageable as overcrowding gets worse in cities, parts of which have become urban slums. Carey writes:

Ignored by the municipal government, [overcrowded urban settlements] usually lack sanitation, clean drinking water, electricity, health care facilities and schools […] The injustices of this daily life underlie the anger of many of today’s protesters. From Quito to Beirut, extreme marginalisation of so many people living in big dysfunctional and dangerous places has boiled over into deadly unrest.

In these circumstances, it is no accident that Latin America, with the world’s slowest economic growth and most glaring inequality, has exploded in the longest-lasting violent protests.

In Chile, where economic grievances boiled over into days of mass protests, an Asia-Pacific Economic Cooperation forum summit was abandoned because of security concerns.

In Bolivia, the long-serving populist president, Evo Morales, was forced out of office and the country by days of urban unrest.

In Haiti, protests over corruption, lack of employment and extreme poverty have paralysed the functioning of the state for months.

In countries such as Ecuador, Peru and Venezuela, unrest is barely contained in the face of endemic corruption and government failures to provide basic services.

In the Middle East, it is a similar story.

In Lebanon, riven by protests for months, Prime Minister Saad Hariri was forced to step down amid growing anger about rising living costs, lack of job opportunities, stagnant wages and corruption.

In Iraq, bloody protests over government failures to address inequality led to the resignation of Prime Minister Adel Abdul Mahdi amid risks of a resumption of a civil war between the country’s Shia and Sunni populations.

In Iran, days of protests over economic austerity were put down brutally by a regime that is battling crippling sanctions.

Elsewhere in the Middle East, the Egyptian regime of Abdel Fattah al-Sisi is under immense pressure from an exploding and impoverished population. Jordan has witnessed its own protests recently over economic hardship.

Libya is riven by civil war that is both driving and facilitating an asylum-seeker exodus across the Mediterranean, principally to Italy. This is, in turn, fuelling anti-immigrant tensions in that country.

In Francemass protests over President Emmanuel Macron’s attempts to address the country’s economic malaise show little sign of easing.

Elsewhere in Europe, unrest is barely contained. In Spain, tens of thousands of Catalonian independence protesters have taken to the streets of Barcelona in a tense standoff with Madrid.

In Russia, sporadic demonstrations against official corruption have become a feature, as they have elsewhere in the former Soviet Union.

In Eastern Europe, authoritarian regimes such as those in Poland and Hungary carry with them their seeds of confrontation with a disaffected population.

In Africa, all the ills mentioned above are present in spades.

South Africa is struggling to cope with huge economic challenges posed by an influx of refugees and a vast underclass camped in townships on the fringes of its major cities.

In Hong Kong, a proposed extradition law that would have facilitated the removal of those accused of crimes or misdemeanours to the mainland might have prompted mass protests. But at the heart of the demonstrations are economic grievances. Hong Kong’s wealth disparities are obscene.

Climate unrest

Across the globe, unrest over climate change is a common denominator and is likely to become more – not less – challenging to governments.

In Australia, in the midst of what may well prove to be the worst bushfires since white settlement, agitation over climate is exerting enormous pressure on the government of the day.

Whether this is fair or not, the government is perceived to be indifferent to climate concerns.

In a study of protest movements, the Brookings Institution found multilateralism flourished, global GDP rose and the percentage of people living in absolute poverty declined steadily after the fall of the Berlin Wall in 1989.

Paradoxically, this was an era that also sowed the seeds of present challenges. Advances in technology and globalisation, spurred by lower trade barriers, boosted global GDP but also led to the dislocation of middle-class livelihoods in many Western societies. The study concludes:

Now, in the wake of the global financial crisis, two critical dynamics have unfolded: first, the powerful democracies of the trans-Atlantic community (the bulwark of the Western-led order) are facing political turmoil at home and setbacks in the liberal quality of their own governments.

Second, the democracies find themselves losing ground internationally to authoritarian powers bent on breaking the hold of these democracies on the character of the international order.

This is not helped by an administration in Washington that has yielded ground to authoritarian dictatorships at a time of global unrest in which stable Western leadership has hardly been more necessary.

*  *  *

In an era of misinformation, please help The Conversation advance its important public service with a contribution today.

Tyler Durden Tue, 12/10/2019 - 23:45
Published:12/10/2019 11:07:03 PM
[Markets] Trump Shuts Down WTO Appeals Court, Sending EU, China Scrambling For 'Plan B' Trump Shuts Down WTO Appeals Court, Sending EU, China Scrambling For 'Plan B'

Axios certainly has the best intro to today's bombshell development: "Internationalists have always dreamed of a court with jurisdiction over all the countries of the world. In 1995, the World Trade Organization was created — allowing the world's countries to press claims against one another for the first time." 

But it won't survive the Trump presidency as on Tuesday his administration has effectively brought it to an end, neutering its ability to intervene in trade wars, having blocked all new appointments to its dispute-resolution court.

WTO file image via Shutterstock.

Starting two years ago the US administration began blocking appointments, and now Trump has run out the clock as the now paralyzed WTO’s Appellate Body over that period declined from seven judges to three, and with two more terms expiring Tuesday, only one judge remains, thus without the ability to issue a binding ruling. 

Also per Axios:

Donald "Tariff Man" Trump (his words) can now impose whatever tariffs he likes, without fear that the WTO might find them to be illegal.

However, there's widespread perception that the WTO has been rendered obsolete until it undertakes major reforms  for example criticisms that it frequently fails to abide by its own rules, has an inconsistent appeals mechanism, and its rules fail to account for state-controlled enterprises.

Image via the AFP

Viewed as among the foremost hindrances to Trump's "America First" program, he's already long bulldozed past WTO rules amid the trade war with China, including punitive levies on Chinese goods (and another tariff increase set for this upcoming weekend), and imposing metal tariffs on allies like Europe, Canada and Japan.

Via the Peterson Institute for International Economics: The World Trade Organization (WTO) resolves trade disputes through its dispute settlement process, a system that the United States helped design to ensure all countries follow negotiated trading rules. Since 1995, a total of 575 cases have been brought to the WTO, and the United States has been either a complainant or respondent in 275 of them

* * *

And now the question of China and "a very unfortunate Plan B" initiative, as described in Bloomberg:

China is in preliminary talks to support the European Union’s backup plan for settling international trade disputes as President Donald Trump’s administration gets closer to scuttling the World Trade Organization’s role in refereeing cross-border commerce.

On Tuesday, China’s Ambassador to the WTO Zhang Xiangchen told Bloomberg News that Beijing is actively working to support the EU’s vision of an appeal-arbitration model, which essentially replicates the work of the WTO’s soon-to-be defunct appellate body.

So far such a Europe-based alternative has drawn interest from current WTO members Australia, Argentina, Brazil, Chile, Japan and Turkey, as noted in the report.

Data for year 2018. You will find more infographics at Statista

Meanwhile, internationalists fear a return to the law of the jungle:

“The WTO is facing its deepest crisis since its creation,” Phil Hogan, the European trade commissioner, told members of the European Parliament this year. If the rules governing international trade can no longer be enforced, “we’d have the law of the jungle.”

And one former appellate body member James Bacchus, told Bloomberg: “There has been a gradual support for this as a very unfortunate Plan B.”

He concluded, “Now it seems to be the best option, given all the lousy options we have left.”

Tyler Durden Tue, 12/10/2019 - 23:25
Published:12/10/2019 10:38:10 PM
[Markets] Asia Markets: Most Asian markets gain amid hopes for China tariff delay; Japan sits out rally Most Asian stock markets traded higher Wednesday, with investor moods cautiously lifted by a report that U.S. President Donald Trump might delay a weekend tariff hike on $160 billion in Chinese goods.
Published:12/10/2019 10:38:10 PM
[Markets] Escobar: What Really Happened In Iran? Escobar: What Really Happened In Iran?

Authored by Pepe Escobar via The Saker blog,

On November 15, a wave of protests engulfed over 100 Iranian cities as the government resorted to an extremely unpopular measure: a fuel tax hike of as much as 300%, without a semblance of a PR campaign to explain the reasons.

Iranians, after all, have reflexively condemned subsidy removals for years now – especially related to cheap gasoline. If you are unemployed or underemployed in Iran, especially in big cities and towns, Plan A is always to pursue a second career as a taxi driver.

Protests started as overwhelmingly peaceful. But in some cases, especially in Tehran, Shiraz, Sirjan and Shahriar, a suburb of Tehran, they quickly degenerated into weaponized riots – complete with vandalizing public property, attacks on the police and torching of at least 700 bank outlets. Much like the confrontations in Hong Kong since June.

President Rouhani, aware of the social backlash, tactfully insisted that unarmed and innocent civilians arrested during the protests should be released. There are no conclusive figures, but Iranian diplomats admit, off the record, that as many as 7,000 people may have been arrested. Tehran’s judiciary system denies it.

According to Iran’s Interior Minister Abdolreza Rahmani Fazli, as many as 200,000 people took part in the protests nationwide. According to the Intelligence Ministry, 79 people were arrested in connection with the riots only in Khuzestan province – including three teams, supported by “a Persian Gulf state,” which supposedly coordinated attacks on government centers and security/police forces.

The Intelligence Ministry said it had arrested eight “CIA operatives,” accused of being instrumental in inciting the riots.

Now compare it with the official position by the IRGC.

The chief commander of the IRGC, Major General Hossein Salami, stressed riots were conducted by “thugs” linked to the US-supported Mujahedin-e Khalq (MKO), which has less than zero support inside Iran, and with added interference by the US, Israel and Saudi Arabia.

Salami also framed the riots as directly linked to “psychological pressure” from the Trump administration’s relentless “maximum pressure” campaign against Tehran. He directly connected the protests degenerating into riots in Iran with foreign interference in protests in Lebanon and Iraq.

Elijah Magnier has shown how Moqtada al-Sadr denied responsibility for the burning down of the Iranian consulate in Najaf – which was set on fire three times in November during protests in southern Iraq.

Tehran, via government spokesman Ali Rabiei, is adamant:

“According to our information, the attack on the consulate was not perpetrated by the Iraqi people, it was an organized attack.”

Predictably, the American narrative framed Lebanon and Iraqwhere protests were overwhelmingly against local government corruption and incompetence, high unemployment, and abysmal living standardsas a region-wide insurgency against Iranian power.

Soleimani for President?

Analyst Sharmine Narwani, based on the latest serious polls in Iran, completely debunked the American narrative.

It’s a complex picture. Fifty-five percent of Iranians do blame government corruption and mismanagement for the dire state of the economy, while 38% blame the illegal US sanctions. At the same time, 70% of Iranians favor national self-sufficiency – which is what Supreme Leader Ayatollah Khamenei has been emphasizing – instead of more foreign trade.

On sanctions, no less than 83% agree they exerted a serious impact on their lives. Mostly because of sanctions, according to World Bank figures, Iranian GDP per capita has shrunk to roughly $6,000.

The bad news for the Rouhani administration is that 58% of Iranians blame his team for corruption and mismanagement – and they are essentially correct. Team Rouhani’s promises of a better life after the JCPOA obviously did not materialize. In the short term, the political winners are bound to be the principlists – which insist there’s no possible entente cordiale with Washington at any level.

The polls also reveal, significantly, massive popular support for Tehran’s foreign and military policy – especially on Syria and Iraq. The most popular leaders in Iran are legendary Quds Force commander Gen. Soleimani (a whopping 82%), followed by Foreign Minister Mohammad Javad Zarif (67%) and the head of the Judiciary Ebrahim Raisi (64%).

The key takeaway is that at least half and on some issues two-thirds of Iran’s popular opinion essentially support the government in Tehran – not as much economically but certainly in political terms. As Narwani summarizes it, “so far Iranians have chosen security and stability over upheaval every time.”

‘Counter-pressure’

What’s certain is that Tehran won’t deviate from a strategy that may be defined as  “maximum counter-pressure” – on multiple fronts. Iranian banks have been cut off from SWIFT by the US since 2018. So efforts are intensifying to link Iran’s SEPAM system with the Russian SPFS and the Chinese CIPS – alternative interbank paying systems.

Tehran continues to sell oil – as Persian Gulf traders have repeatedly confirmed to me since last summer. Digital tracking agency Tankertrackers.com concurs. The top two destinations are China and Syria. Volumes hover around 700,000 barrels a day. Beijing has solemnly ignored every sanction threat from Washington regarding oil trading with Iran.

Khamenei, earlier this month, was adamant:

“The US policy of maximum pressure has failed. The Americans presumed that they can force Iran to make concessions and bring it to its knees by focusing on maximum pressure, especially in the area of economy, but they have troubled themselves.”

In fact “maximum counter-pressure” is reaching a whole new level.

Iranian Navy Commander Rear Admiral Hossein Khanzadi confirmed that Iran will hold joint naval drills with Russia and China in the Indian Ocean in late December.

That came out of quite a significant meeting in Tehran, between Khanzadi and the deputy chief of the Chinese Joint Staff Department, Major General Shao Yuanming.

So welcome to Maritime Security Belt. In effect from December 27th. Smack on the Indian Ocean – the alleged privileged territory of Washington’s Indo-Pacific policy. And uniting the three key nodes of Eurasia integration: Russia, China and Iran.

Khanzadi said that, “strategic goals have been defined at the level administrations, and at the level of armed forces, issues have been defined in the form of joint efforts.” General Yuanming praised Iran’s Navy as “an international and strategic force.”

But geopolitically, this packs a way more significant game-changing punch. Russia may have conducted naval joint drills with Iran on the Caspian Sea. But a complex drill, including China, in the Indian Ocean, is a whole new ball game.

Yuanming put it in a way that every student of Mahan, Spykman and Brzezinski easily understands:

“Seas, which are used as a platform for conducting global commerce, cannot be exclusively beneficial to certain powers.”  

So start paying attention to Russia, China and Iran being quite active not only across the Heartland but also across the Rimland.

Tyler Durden Tue, 12/10/2019 - 23:05
Tags
Published:12/10/2019 10:12:20 PM
[Markets] Global Markets: Asian shares drift as tariff deadline looms, pound eases on YouGov poll Asian stocks drifted on Wednesday as Sino-U.S. trade talks showed little progress ahead of a weekend deadline for the imposition of additional U.S. tariffs, and the pound wobbled as opinion polls pointed to a tight British election on Thursday. MSCI's broadest index of Asia-Pacific shares outside Japan drifted 0.1% higher, as markets in the region wavered either side of flat. Japan's Nikkei traded 0.2% lower, Australia's S&P/ASX 200 rose by the same margin. Published:12/10/2019 10:12:20 PM
[Markets] These Secretive Oil Companies Control $3 Trillion In Wealth These Secretive Oil Companies Control $3 Trillion In Wealth

Authored by Anes Alic via OilPrice.com,

They control the vast majority of the world’s oil and gas assets, yet the average person has never even heard of them, outside of those that are famous for things like getting attacked by missiles or becoming embroiled in a high-profile corruption scandal. 

State-owned oil and gas companies (aka, the national oil companies, or NOCs) control at least US$3 trillion in oil and gas assets, compared to around $2.5 trillion as of 2017, and hold an estimated 90% of all known reserves--considerably more than publicly listed companies such as BPExxonMobil and Shell. Meanwhile, Saudi Aramco leads the pack as the world’s most profitable company. 

That means that NOCs control about as much wealth as all U.S. billionaires or roughly twice the assets of global multilateral development banks. 

Source: Resourcegovernance.org

If we go by annual revenue alone, China’s state-run Sinopec—explorer, producer, refiner, marketer and distributor—was the biggest oil and gas company in the world at the end of 2018. By net income, that title goes to Saudi Aramco, which reported net income in 2018 of $111.1 billion, compared to Sinopec’s $9.1 billion. 

These numbers may seem a bit wild, but no one really ever knows where they come from or how they are derived. 

By annual revenue metrics, by year-end 2018, four of the top 10 oil and gas companies in the world were state-owned: Sinopec, Aramco, China National Petroleum Corporation (CNPC) and Russian Gazprom. The other six Top 10 titles went to Shell (4th), BP (5th), Exxon (6th), Total (7Th) Valero (8th) and Phillips 66 (10th).

Despite their economic importance, most of these 71 NOCs are notoriously secretive--Norway’s Equinor being one of the few exceptions. For the remainder of the NOCs, their opacity poses a significant fiscal and governance risk, especially when they carry huge debts.

Source: IMF.Org

Massive Fiscal Players

The National Oil Company Database has listed at least 19 NOCs with assets in excess of $50 billion. 

At least 25 NOCs account for 20% or more of government revenues, with Nigeria’s national oil company, the Nigerian National Petroleum Corporation (NNPC), collecting about half the general government revenues through oil and gas sales. 

The database also reveals a pattern of weak public reporting by many NOCs, with only 20 of 71 NOCs revealing sufficient information for the 10 most critical indicators. More than half of the NOCs fail to publish financial statements audited by independent auditors, with some like the Republic of Congo’s SNPC failing to even disclose a balance sheet at all. 

It’s often only when their debt loads become unsustainable that their true extent is revealed to the public, pushing the governments that had guaranteed the debts into a financial crisis.

NOCs frequently borrow funds to finance new investments, maintain large discretionary expenditures or fulfill certain political agendas. The borrowings may take the form of loans from other oil companies (e.g., Nigeria’s NNPC), from banks (e.g., Ghana’s GNPC), from another government entity (e.g., Sonatrach which borrows from the Algerian Central Bank), by issuing corporate bonds (e.g., Russia’s Rosneft) as well as oil-backed loans from other traders or NOCs (e.g., Kazakhstan’s KazMunayGas). 

NOC borrowing does have its benefits. The need to borrow can incentivize these oil and gas companies to develop healthy corporate governance practices in a bid to improve their credit ratings. A good case in point is Saudi Aramco’s recent bond issuance, which provided a rare peek into its financial performance.

Excessive debt can, however, create significant risks. 

Some NOCs such as Venezuela’s PDVSA and Angola’s Sonangol have debts exceeding 20% of the country’s GDP. Other NOCs are highly leveraged, such as Russia’s Rosneft and the UAE-headquartered TAQA. Mexico’s Pemex has negative equity.

Source: IMF.Org

Source: Brooking.edu

Nevertheless, maintaining healthy levels of debt and equity are not always enough. Consider Venezuela’s PDVSA, which despite holding 335 billion barrels of oil-equivalent reserves--the largest reserves of any NOC-- is still unable to service all of its $35 billion of debt.

All those riches are mostly locked underground, yet the company is unable to access them after years of mismanagement as well as the impact of sanctions and the economic crisis. Public debt figures of Venezuela and Mexico include debts by their NOCs, though debts by Brazil’s Petrobras or Bolivia’s YPFB are not included in their national debts.

Some NOCs such as Norway’s Equinor and Colombia’s Ecopetrol and have consistently delivered strong returns on public investment. Yet in too many countries NOCs have struggled to develop into commercially efficient actors, and in extreme cases have actively contributed to large-scale corruption, not to mention that they largely remain unaccountable for the role they play in climate change.

So, NOCs may control $3 trillion in oil and have the luxury of being entirely opaque and, in some cases, thoroughly corrupt, but their non-state-owned international oil company (IOC) brethren still tips the scales overall on revenue and income. 

Where the IOCs lose out is politically because NOCs aren’t always about doing good business; sometimes, there about establishing a foothold somewhere even when it doesn’t make economic sense. That can equate to enormous power over time.  

Tyler Durden Tue, 12/10/2019 - 22:25
Published:12/10/2019 9:36:50 PM
[Markets] ‘You have absolutely zero power’ — I was a McKinsey consultant like Pete Buttigieg ‘Telling you the projects I worked on, or the clients I advised would tell you nothing about me or my values.’
Published:12/10/2019 9:36:50 PM
[Markets] Trump mocks impeachment, talks up trade deal at rally in key state Pennsylvania Trump mocks impeachment, talks up trade deal at rally in key state Pennsylvania Published:12/10/2019 9:07:10 PM
[Markets] Jonathan Turley: "They Even Threatened My Dog" For Defending Trump At Impeachment Hearings Jonathan Turley: "They Even Threatened My Dog" For Defending Trump At Impeachment Hearings

Authored by Paul Joseph Watson via Summit News,

Law professor Jonathan Turley revealed that even his dog was violently threatened after he testified in favor of President Trump during the impeachment hearings.

Turley already spoke about death threats he received following his testimony last week, but went further in an interview with CBS anchor Norah O’Donnell.

“I know you received a lot of threats after what you did last week,” O’Donnell told the George Washington University law professor.

“And my wife and dog,” Turley responded.

“To be fair, you did talk about them during your testimony. You did bring up your wife and dog,” O’Donnell said.

“Who would shoot a Goldendoodle?” Turley asked in response.

“Maybe a Shih Tzu, but not a Goldendoodle. I don’t understand where the anger comes from. Although as an academic, the thought that you could talk about James Madison and that would be fighting words is something I haven’t seen outside of a law school.

The violent anger directed towards Turley came as a result of him challenging the impeachment process and arguing that there was not enough evidence to impeach President Trump.

*  *  *

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Tyler Durden Tue, 12/10/2019 - 21:45
Published:12/10/2019 9:07:10 PM
[Markets] CBP Baltimore Breaks Record For Recovered Outbound Stolen Vehicles, 95% Of Cars Headed To Africa  CBP Baltimore Breaks Record For Recovered Outbound Stolen Vehicles, 95% Of Cars Headed To Africa 

U.S. Customs and Border Protection (CBP) - Baltimore Service Port has reported a new record in the number of stolen vehicles being exported from the US. CBP said 246 stolen vehicles, worth over $10.3 million, have been recovered at seaports in Baltimore, Wilmington, Del., and Philadelphia in 2019.

Baltimore ranks second nationally behind New York, in which 257 stolen vehicles were recovered in 2019.

Nationwide, more than 1,000 vehicles have been recovered during import and export inspections, with a majority of the vehicles recovered on East Coast ports. 

CBP said it has been a record year for recoveries in Baltimore, Philadelphia, and Wilmington. Recoveries this year are up 112% over last year's figures. At least 66% of the recoveries occurred at the Port of Baltimore. 

The agency blamed transnational criminal organizations (TCOs) that operate up and down Interstate-95 for the jump in stolen vehicles.

"Export examinations are a critical component to Customs and Border Protection's border security mission. Transnational criminal organizations use stolen vehicles as currency and they conceal illicit revenue from their illegal activities in outbound cargo," said Casey Durst, Director of Field Operations for CBP's Baltimore Field Office. "CBP officers remain committed to striking back at criminal groups where it hurts most, by intercepting their illegal exports and illicit financial gains."

CBP said at least 95% of the stolen vehicles recovered at East Coast ports were destined to West African nations, including Benin, The Gambia, Ghana, Ivory Coast, Nigeria, Senegal, Sierra Leone, and Togo.

CBP provides details of some of the vehicles recovered: 

  • 80% (198 vehicles) were from model years 2015 through 2019.
  • 63% (156 vehicles) were sport utility vehicles. Nationally, SUV's comprised 45% of CBP's recovered stolen vehicles during 2019.
  • The top-5 recovered stolen vehicles were the Land Rover Range Rover (28), Toyota Camry (15), Toyota Rav4 (12), Toyota 4Runner (9), and Cadillac Escalade (7).
  • The most expensive recovered stolen vehicle was a 2017 Audi R8, valued at $162,900, was destined to Togo.
  • The newest vehicle was a 2020 Mercedes Benz GLE350, destined to West Africa.
  • The oldest vehicle was a 1988 Mack truck, destined to West Africa. The oldest passenger vehicle was a 2002 Toyota Camry, destined to Nigeria.

The agency warned that the number of recovered stolen vehicles have surged in the last several years, officials said the trend would likely persist into the new year. 

Tyler Durden Tue, 12/10/2019 - 21:25
Published:12/10/2019 8:36:02 PM
[Markets] Repocalypse 2.0 On Deck? "Turn" Repo Rates Are Blowing Out Repocalypse 2.0 On Deck? "Turn" Repo Rates Are Blowing Out

Earlier today, repo market icon Zoltan Pozsar scared the living daylights out of cross-asset traders everywhere with what could be called a doomsday prediction in which the former NY Fed and Treasury staffer warned that as a result of collapsing systemic liquidity and a drought of "excess reserves", the coming days could see a lock up in the FX swap market (in the process sending the US Dollar soaring), which would then translate to a violent deleveraging of massively levered hedge funds, and a liquidation first in the bond then stock market.

Yet while Pozsar had seemingly no concerns staking his hard-earned reputation on the outcome of a potentially catastrophic event that would subsequently be used by the Fed as a catalyst for QE4, he was far less confident about "when" it would occur:

it’s hard to have a definitive answer: it depends. It depends on how equities do, which depends on the trade deal and other random tweets. It depends on how auctions go, which depends on the equity market and the curve slope relative to actual funding costs.

Still, now that the genie is out of the bottle, everyone will become a cross-asset expert, trying to isolate even the smallest notable deviation from the norm as the horseman of the coming market apocalypse, and focusing first and foremost on the most direct indication that something is (again) broken in the repo market: the overnight general collateral repo rate.

However, what concerned market watchers will find when they pull up the recent O/N G/C repo rates is... nothing. Indeed, after the turbulent repo moves in mid/late September, and one outlier event in mid-October, the past two months have seen O/N repo barely move.

A very different picture however emerges when looking at forward, or "turn" repo rates, those that capture the year-end interview of Dec 31-Jan 2 (hence "turn"), where the past month has seen a sharp, consistent increase in repo rates, which peaked in the past two days around 4.10%-4.20%.

While one can argue that the rising repo pressure on the "turn" was due the traders starting to frontrun the dismal events laid out by Pozsar, there is a more conventional explanation for the upward pressure on the Turn, which as another repo expert, Curvature's Scott Skyrm writes today, is "due to an abundance of collateral sellers, without any significant new cash entering the market - through end user cash investors or through the Federal Reserve." Or, as he summarizes, "Basically, more sellers than buyers" of collateral.

That said, following today's modest drop in the "turn", we may have found ourselves in a very brief holding pattern, as the market is waiting for the specifics in the next round of Fed RP Operations to be announced on Thursday.

And this is where things get interesting: if Pozsar is right, nothing the Fed announces on Thursday short of QE4, will help relieve the pressure on the "turn" into year end, which the Credit Suisse strategist sees rising ever higher, until it forces dealers to freeze either the FX swap market, or the repo market, or - devastatingly - both. Everything else would, or perhaps should, be ignored by the market as the reserve hold in the financial system is massive and growing by the day as the Fed's T-Bill QE failed to plug the liquidity drain.

Skyrm, on the other hand, has a more sanguine view, and expects the Fed to announce a $50 billion (at least) term operation for Monday December 23 (double the current term ops) and a $50 billion (at least) term operation for Monday, December 30. Of course, even Skyrm hedges, noting that "if the Fed announces operations of $25 billion or less on those days then Turn rates will immediately spike higher. However, in the past the Fed has always provided enough liquidity to the market and I still have faith."

The Curvature analyst may have faith, but if Zoltan Pozsar is right - and he traditionally has been - in his apocalyptic forecast, the Fed has not been providing enough liquidity since mid-September, and certainly not in the correct format, and it will fail to do so in the coming days, forcing the "worst case scenario" Pozsar described, one in which the "year-end in the FX swap market is shaping up to be the worst in recent memory, and the markets are not pricing any of this." It is only once markets "start pricing this", especially after the liquidity-draining Dec 16 tax deadline, that the Fed will have no choice but to respond to the violent market repricing lower, finally launching the QE4 that mega dealers such as JPM have been begging for all along.

So who will be right: Pozsar, and his fatalistic forecast for a market crash in the coming days (that triggers QE4), or Skyrm's cautious optimism? The answer will be revealed by the "turn" repo rate: if it resumes rising, and hits 5%, 6%, 7% or more, then all bets are off.

Tyler Durden Tue, 12/10/2019 - 20:44
Published:12/10/2019 8:06:13 PM
[Markets] The Good, The Bad, & The Ugly In NAFTA 2.0 The Good, The Bad, & The Ugly In NAFTA 2.0

Authored by Mike Shedlock via MishTalk,

Democrats agree to pass USMCA, Trump's NAFTA replacement.

Goodbye NAFTA, Hello USMCA

In what "seemingly" constitutes a major victory for Trump, Democratic Lawmakers Agree to Support North America Trade Pact.

House Democrats agreed to support the new U.S. trade deal with Mexico and Canada, marking a victory for President Trump who ran for office in 2016 on a pledge to remake or blow up the North American Free Trade Agreement.

House Speaker Nancy Pelosi called the new version of the U.S.-Mexico-Canada Agreement a “victory for American workers” at a Tuesday morning news conference. The pact will replace Nafta when ratified and contains provisions aimed at creating more manufacturing jobs, for example, by increasing the proportion of vehicles that must originate in North America for the cars and trucks to receive duty-free treatment.

It also includes updated labor rules and beefed-up enforcement provisions to hold firms in Mexico to account on labor, according to people familiar with the emerging deal.

USMCA had long been supported by Republicans and leading business trade groups but opposed by Democrats over concerns such as the legal language enforcing new labor rules. The Democratic approval Monday comes as a rare bipartisan moment of cooperation on economic policy at a time when Capitol Hill is divided over the impeachment inquiry.

USMCA Key Provisions

  1. Mexican Labor: U.S. labor unions and Democrats have long complained that Mexican workers can’t always form unions freely and demand fair pay, a situation they say puts pressure on U.S. manufacturing jobs. The Trump administration’s USMCA has new additional labor rules, not included in the current Nafta, as well as new enforcement procedures demanded by Democrats.

  2. Auto Rules: Compared with Nafta, USMCA significantly tightens the rules that the auto industry has to follow in order to trade vehicles duty free in North America. A certain proportion of a car will have to be produced by workers with higher wages, and a greater proportion of components will have to originate in North America.

  3. Digital Freedom: USMCA, unlike the current Nafta, includes rules mandating the free flow of data among the three countries. This and other novel provisions on exchange rates and other areas aren’t so crucial for Canada and Mexico but could later be applied to pacts with more restrictive countries or even China.

  4. Agriculture: A deal to pass USMCA means farmers of major crops no longer have to worry about President Trump potentially pulling out of the existing Nafta and leaving them fewer major export markets. USMCA also gives dairy farmers more access to Canada.

  5. Pharma: Big drugmakers are likely to be disappointed, since Democrats pushed the Trump administration to remove language that would have protected expensive biologic drugs from generic imitators for 10 years. The existing Nafta treaty has no such drug protections.

Point by Point Comments

1: Pelosi wanted more, and settled for less. Five days ago, the Wall Street Journal reported Democrats Want to Invade Mexico. Essentially, the unions demanded that the US be allowed to enforce labor laws in Mexico. However, Mexico would not agree. Canada would not have gone alone either.

2: The devil is in the details. I suspect Mexico will be able to circumvent these rules, if it wants.

3: Digital rules accomplish nothing.

4: Agriculture essentially remains the status quo. Wisconsin dairy farmers do get a minor victory.

5: This is a potential victory for US consumers, but one that Trump did not appear to want. In practice, however, I wonder if it does much.

AFL-CIO President Rich Trumka Tweets

Dramatically Worse

Nearly anything the AFL-CIO supports is, by definition, bad for US consumers.

Thus, if this deal really is a "dramatic improvement", I propose it is dramatically worse.

The one place Trumka is correct, most likely by accident, is on Big Pharma.

Trump on USMCA

Devil in the Details

What this comes down to is how easily Mexico can get around key provisions 1 and 2.

The more Mexico adheres to those points, the worse the deal Trump negotiated.

Good for Unions, Bad for Consumers

If it's Good for Unions, It's Bad for Consumers.

I wrote about that construct a couple days ago in France Should Take a Lesson From Ronald Reagan: Fire the Strikers.

Even FDR understood that public unions and public service were impossibly incompatible.

Click on the link for discussion.

Proud Union Hater

Unions promote on seniority, not talent. Anyone who wants to get ahead based on performance, not seniority, should not be a union supporter.

Moreover, corrupt union leaders get into bed with corrupt politicians. The combination is the biggest vote-buying racket in the world.

This puts the public at the mercy of militant teachers' unions, police unions, and firefighter unions all demanding and receiving untenable pension promises.

GM and Ford

GM's bonds, despite a bailout (necessary because giving into union demands bankrupted the company) are just a step above Junk.

So are Ford bond.

The strike is over. Hooray. But GM has a second date with bankruptcy court. Ford will have a first.

Pensions

Meanwhile, please note that Illinois pensions are among the worst funded in the entire nation. Things are even worse in Chicago where Each Chicagoan Owes $140,000 to Bail Out Chicago Pensions.

Chicago Mayor Lori Lightfoot's only solution is the same as that of predecessor Rahm Emmanuel: Raise Taxes.

Get The Hell Out Now

These facts, and they keep piling up, is what prompted me to write on October 4, Escape Illinois: Get The Hell Out Now, We Are

Also consider Chicago Headed for Insolvency, Get the Hell Out Now.

In 2020 we are moving to Utah. We have had enough.

Trump Irony

Trump is bragging about USMCA. And most Trump supporters will see it that way.

But at best, the deal represents no significant changes.

Importantly, the more the AFL-CIO and Pelosi are right, the worse Trump's deal is in practice.

Tyler Durden Tue, 12/10/2019 - 20:05
Published:12/10/2019 7:35:33 PM
[Markets] U.S. and Chinese trade negotiators planning for delay of December tariffs: WSJ U.S. and Chinese trade negotiators planning for delay of December tariffs: WSJ Published:12/10/2019 7:35:33 PM
[Markets] Yuan Tumbles After Navarro Warns "No Indication That Tariffs Will Be Delayed" Yuan Tumbles After Navarro Warns "No Indication That Tariffs Will Be Delayed"

While US equity futures have barely dipped, offshore yuan has tumbled - erasing the earlier optimistic spike - after White House Trade Advisor Peter Navarro told Fox News that he has "no indication that December tariffs will not be put on."

Additionally Navarro said that China "was trying to shape the narrative on trade talks to affect the futures market," and that is up to the Chinese if a trade deal can get done.

Yuan erased all of the gains from China's comments this morning...

Source: Bloomberg

And while Yuan plunged, Dow futs dropped only 30 points (for now)...

 

Tyler Durden Tue, 12/10/2019 - 19:52
Published:12/10/2019 7:06:15 PM
[Markets] Key Words: The stock market will ‘breathe a sigh of relief’ if President Trump is re-elected in 2020, says billionaire Howard Marks Howard Marks, co-founder of Oaktree Capital Management, who has made billions investing in distressed debt, says that a 2020 election victory likely would be a major relief for Wall Street investors.
Published:12/10/2019 6:35:31 PM
[Markets] Paul Volcker: The Last Of His Kind Paul Volcker: The Last Of His Kind

Authored by Jim Rickards via The Daily Reckoning,

One of the most important figures in the history of U.S. monetary policy, Paul Volcker, died Sunday at the age of 92.

Volcker is famous for having raised interest rates all the way to 20% in June 1981, the highest rates since the Civil War.

His actions are widely credited for ending the great inflation of the 1970s and setting the stage for the Reagan economy of the ’80s (although his sky-high rates nearly sank the economy at first).

Volcker didn’t kill inflation right away — it took another couple of years to finally end it, but rates were never that high again.

Volcker had a solid understanding of inflation and had opposed going off the gold standard in 1971.

He was one of the people in the room at Camp David when Nixon made the decision to close the gold window. He was actually one of the move’s primary strategists.

People assume Nixon and his team intended to permanently sever the dollar from gold. But it’s not true.

What Nixon actually said — and Paul Volcker confirmed this when I spoke to him — is that they didn’t think the U.S. was permanently going off the gold standard.

Nixon, and others involved with the decision, considered it a temporary suspension until the major global powers could get together, rewrite the system and get back to a gold standard at a much higher gold price (it was then pegged at $35/ounce).

Volcker understood that it was necessary to get the gold price right before a gold standard could resume. After all the money printing that went to fund Vietnam and the Great Society in the 1960s, he knew that a higher gold price was necessary.

In other words, Volcker knew the U.S. would have to avoid the mistake Winston Churchill made in 1925 as Great Britain’s chancellor of the Exchequer, the equivalent of the U.S. Treasury.

Churchill was determined to fix the gold price (measured in sterling) at the pre-WWI parity. He felt duty-bound to live up to the old value.

But he neglected all the money printing that occurred to pay for the war. A higher gold price was required to reflect the inflation that took place. Otherwise, setting the gold price too low would be extremely deflationary.

And that’s what happened. Churchill fixed gold at the pre-war value.

By failing to set gold at a higher price (again, measured in sterling), Churchill essentially cut the money supply in half. That threw the U.K. into a depression.

While the rest of the world ran into the depression in 1929, in the U.K. it started in 1926. In other words, Churchill’s decision plunged the U.K. into recession three years ahead of the rest of the world.

Going back to gold at a much higher price measured in sterling would have been the right way to do it. Choosing the wrong price was a contributor to the great depression.

So in 1971, Volcker realized that gold would have to be fixed at a higher price to reflect the money-printing that had taken place during the preceding years. Otherwise, it could have dire consequences.

Of course, the point was moot because the U.S. never did reopen the gold window. And the ’70s were certainly marked by inflation, not deflation.

Most people don’t know how close to hyperinflation the U.S. came by the late ’70s, and how close the world was to losing confidence in the dollar.

In 1977, the U.S. had to issue Treasury bonds denominated in Swiss francs because no one wanted dollars, at least at an interest rate that the Treasury was willing to pay.

They were called Carter bonds.

Not surprisingly, the economic morass of the late ’70s cost Carter reelection. Inflation was between 14% and 15% by the time Reagan was sworn in.

Many people forget that Carter appointed Volcker, not Reagan. He began raising rates right away, although they only rose to 20% under Reagan.

Volcker’s extreme interest rates helped send the economy into recession, first in mid-1980 and again in 1982.

Although Volcker had Reagan’s support, many voices in the Republican Party wanted him replaced by a more accommodating Fed chairman. So Volcker was not extremely popular at the time.

But he knew the dollar is ultimately backed by confidence, and he was determined to restore it.

Volcker did tame inflation, which was back down to about 3% in 1983 after peaking near 15% in 1980. The dollar strengthened, the economy recovered and one of the greatest bull markets in stock market history was underway.

So Paul Volcker remains one of the most important Fed chairmen ever.

May he rest in peace.

Tyler Durden Tue, 12/10/2019 - 19:25
Published:12/10/2019 6:35:31 PM
[Markets] "Unprecedented" China Auto Market Collapse Heads Into Third Year After November Sales Drop 4.2% "Unprecedented" China Auto Market Collapse Heads Into Third Year After November Sales Drop 4.2%

The ongoing recession in the global auto market has undoubtedly been lead by China - and if November's trends are any indication, the entire industry could be setting up for an ugly 2020. 

Sales of sedans in China fell 4.2% in November to 1.97 million units, according to the CPCA on Monday.

This marks the 17th decline in the last 18 months and all but ensures that China will see a second straight annual drop for its auto market, according to Bloomberg

Last year was the first time the market shrunk in decades, with ripple effects extending to places like Europe, Latin America and the rest of Asia. The industry has faced headwinds in the ongoing trade war, in addition to an overstretched consumer and ride-hailing and car-sharing services. 

Areas outside of China's big cities suffered the most, as a slowing economy kept consumers out of the showrooms that sold cheaper local brands. Experts are predicting consolidation in the industry as a result. Some brands, like Suzuki and PSA Group, have pulled out of China (or are in the process of selling stakes). 

Bigger names like Toyota and BMW have weathered the storm well due to demand for hybrid cars - but this demand is anything but a guarantee moving forward.

EVs were once a reason for optimism, especially with Volkswagen spending $4.4 billion next year to ramp up EV production in the country and Tesla moving a new plant to Shanghai. 

But last month, wholesales of NEVs fell a stunning 42% to 79,000 units. 

Recall, as we reported days ago, it's looking like Beijing isn't so excited to help sustain the EV niche of the market anymore.

We also noted that Beijing's ambivalence was starting to show up in the numbers. EV sales fell off a cliff after June of this year, when the government slashed purchase subsidies. From July to October, sales of new energy cars were down 28% from the year prior. 

Subsidies are unlikely to come back, we noted. The government is now aiming for "quality instead of just quantity", noting that subsidies would be more costly than they were a few years ago, when the market was smaller. Instead, Beijing said it will spend the money on building out its infrastructure, like its charging stations. 

A Bloomberg NEF report predicts that the EV market will rebound next year, however, stating: “Potential cuts to subsidies at the beginning of 2020 are keeping the industry in limbo. A shrinking market could force the government to give up its plans on cuts.”

Tyler Durden Tue, 12/10/2019 - 19:05
Published:12/10/2019 6:05:48 PM
[Markets] Dow Jones Futures: Stock Market Rally Seeks Direction, But These 5 Giants Are True Leaders Dow futures: The stock market still seeks China trade clarity, but Apple, AMD, Google, Microsoft and Target are acting like true leaders. Published:12/10/2019 5:35:45 PM
[Markets] Market Extra: Lending standards to slide for homeowners with spotty credit, Moody’s warns in 2020 outlook Shrinking home affordability and increased competition among lenders are poised to lead to lower loan standards for homeowners with less-than-stellar credit, Moody’s warns in year-ahead mortgage bond outlook.
Published:12/10/2019 5:35:45 PM
[Markets] Meat Prices Spike 8% In Brazil, Threatening A Holiday-Gathering Mainstay For Many Meat Prices Spike 8% In Brazil, Threatening A Holiday-Gathering Mainstay For Many

Consumers in Brazil are facing a crisis: barbeques, which are a mainstay of Brazilian cuisine and have inspired countless Brazilian steakhouses, are under threat.

The price of beef, pork and chicken in the country are experiencing a sharp rise, even while inflation elsewhere in the country remains low, according to Bloomberg. The meats are up 8.1% month over month in November, threatening to take the main course off the table at many Brazilian celebrations this upcoming holiday season. 

Renata Ziller, a teacher and mother of three in Brasilia, said:

“We’ll have to do something with rice, I guess. I’ll have to use some creativity because the prices are so high.”

Ziller

The price rise has been a result of increased demand for Brazilian meat from China, in addition a drought impacting the quality of many cattle pastures. The price rise has political and economic implications, Bloomberg writes.

Meat was invoked by leftist former President Luiz Inacio Lula da Silva, who said he would fight for the rights of Brazilian workers to “hold family gatherings, have a barbecue, and drink a little beer, which is what makes us happy.”

President Jair Bolsonaro also commented on the price hikes: “People are complaining, rightly, that the price of meat has gone up. The world has started to buy more meat from us. Unfortunately that’s what happens.” 

Bolsonaro supports the free market, and said there was little he could do about the price spike - a refreshing take from a politician. 

The price of a chicken in the country was up 8% year over year while pork rose 15% and a filet mignon has risen by about 20%. Meat had the largest impact of all products on the country's inflation numbers for November. 

Rafael Cortez, from the consultancy Tendencias Consultoria, said: “Inflation in general ought to be a positive factor for the government, however this current rise in a product that is so dear to the average Brazilian could favor the opposition narrative. We are already starting to see this on social media.”

Geovana Santos, a 20-year-old trash collector with a one-year old daughter, said the price spikes have caused her to change her diet:

"Basically I just have to buy sausage, because it’s cheaper,” she concluded.

Eventually, as prices rise, less Brazilians like Santos will eat meat and demand will hopefully taper, causing prices to again slide lower. With free market concepts like these so simple intuitive and effective, it's no wonder Central Banks can't appreciate them. 

Tyler Durden Tue, 12/10/2019 - 18:25
Published:12/10/2019 5:35:45 PM
[Markets] In One Chart: Why President Trump’s constant cheerleading of the stock market might not help him much come election time A recent poll of likely voters shows 61% of Americans said that the market’s rally has had little or no impact on their finances.
Published:12/10/2019 5:06:04 PM
[Markets] The Dow Fell 28 Points Because Trade Trumps Impeachment U.S. and Chinese trade negotiators are reportedly planning for a delay in tariffs due to take effect on Sunday, while Democratic lawmakers reached an agreement with the Trump administration to support a trade deal with Mexico and Canada. House Democrats also announced two articles of impeachment against President Donald Trump. The Wall Street Journal reported today that U.S. and Chinese trade negotiators are laying the groundwork to delay a fresh round of tariffs on $165 billion worth of Chinese imports set to kick in on Dec. 15. Published:12/10/2019 5:06:04 PM
[Markets] 6 Dead In Hours-Long Shootout At Jersey City Kosher Grocery 6 Dead In Hours-Long Shootout At Jersey City Kosher Grocery

Update 4: Just hours after the shooting began, it looks like the final tallies are in.

Reuters reports that six people have been killed, including the two shooters: (those killed include one police officer, three people who were inside the JC Kosher Supermarket when the shooting began, and both of the suspected shooters).

Jersey City Mayor Steven Fulop told a news conference that there were multiple people deceased inside the store, where suspects reportedly had holed up and exchanged gunfire with law enforcement in a standoff that lasted for hours.

Several news media outlets including the New York Times, reported six people were dead, citing unnamed law enforcement sources, but Reuters could not immediately confirm the number of casualties.

The New York Times said the dead included a police officer, three victims who were in the store and two suspected gunmen.

Local media also reported the shooting unfolded at or near the JC Kosher Supermarket, though a city official told reporters there was no evidence the bloodshed was terror-related.

Two more officers and another bystander were wounded during the hours-long shootoff between police, federal agents and the shooters, who holed themselves up inside the supermarket for a period.

Though it started at a kosher supermarket, police and Jersey City's mayor said the attack wasn't a deliberate act of terror against Jews.

* * *

Update 3: Both gunmen are now reportedly down. So far, casualties - other than the shooters - include only one cop, though two others were shot.

Rabbi Moshe Shapiro, teh Chabad Chief Rabbi of New Jersey, was apparently in the grocery store when one of the suspects walked in and started firing.

* * *

Update 2: President Trump was briefed on the Jersey City shooting at the White House.

Here's more from a liquor store employee who heard the shootout, according to NBC News.

SWAT teams with Jersey City and state police were among those responding Federal agents from the Bureau of Alcohol, Tobacco, Firearms and Explosives in Newark and the FBI were also on the scene.

"I can hear the gunshots. It's like firecrackers going off," said Andy Patel, who works at a liquor store about three blocks away from the scene.

"They were shooting like crazy about an hour ago. Then it stopped for like 20 or 30 minutes. The cops were clearing everyone off the streets."

* * *

Update: Local media is reporting that one of the shooters has been taken out by police at a bodega somewhere near the intersection of JFK Boulevard and Claremont Ave in Jersey City. Some reports claim that one of the shooters was hit, but kept shooting.

Heavy fire can still be heard in videos hitting social media.

Some reports have claimed that three cops have been shot, along with two civilians.

There appear to be two separate scenes. One around the Bay View Cemetery, and another closer to New Jersey City University. All schools in the city have been closed. According to ABC, the scene is still "very active." One officer was reportedly shot in the head, and is in critical condition.

Follow along with a live feed of ABC's reporting below:

* * *

Yet another stunning active-shooter incident is unfolding Tuesday afternoon in New Jersey City, as two armed suspects engaged in a firefight with a group of Jersey City police officers, with some media reports claiming that the attackers escaped to nearby rooftops, where at least one of them continued firing on the street below with what were described as "long guns."

Loud gunshots can be heard in videos posted to social media. At the end of the video below, a man can be heard shouting "they took him out", though more gunshots followed.

Other videos showed ambulances responding to the scene.

Another video shows officers marching up the street warning pedestrians to take cover.

https://abc7ny.com/live-gunman-opens-fire-on-police-in-jersey-city/5744…

Police said at least one gunman is "shooting at anyone they see on the street," according to NJ.com. The shooting reportedly started in a cemetery before the shooter fled into a nearby bodega, according to ABC New York.   Another report claimed the two shooters targeted a Jewish grocery store and targets on the street outside, raising the possibility that this could be another anti-semitic attack. ABC said the shooting began at Bay View Cemetery, though there don't appear to be any kosher groceries close enough to the cemetery.

Police searching that cemetery have reportedly recovered a wounded officer's vehicle and radio. Surveillance footage has also been recovered showing one of the suspects entering a bodega after exiting from a van on the street.

No deaths have been reported yet, but at least one cop and one civilian have been shot. One of the gunmen has fired at a nearby school, prompting authorities to put all schools in the area on lock-down, and federal agencies, including the ATF, are on the scene near Martin Luther King Drive, where the shooting is taking place. That thoroughfare has been closed in both directions because of the shooting. Jersey transit has suspended rail and bus service on the west side of Jersey City.

The Twitter account for the New Jersey Police PBA asked that readers keep the Jersey City officers in their prayers.

Some reports claim that one of the two shooters is a woman, but we haven't been able to confirm that. There have also been unconfirmed reports of an IED in a store.

Tyler Durden Tue, 12/10/2019 - 17:58
Published:12/10/2019 5:06:03 PM
[Markets] The stock market will ‘breathe a sigh of relief’ if President Trump is re-elected in 2020, says billionaire Howard Marks Howard Marks, co-founder of Oaktree Capital Management, who has made billions investing in distressed debt, says that a 2020 election victory likely would be a major relief for Wall Street investors. Published:12/10/2019 4:37:31 PM
[Markets] Broke Billionaires (And Other Ridiculous Signs Of The Top) Broke Billionaires (And Other Ridiculous Signs Of The Top)

Authored by Simon Black via SovereignMan.com,

File this one away under ‘completely ridiculous’.

You might have heard that Elon Musk was on trial last week in Los Angeles; he was being sued because he claimed (multiple times) that British spelunker Vernon Unsworth was a pedophile. (He’s not.)

It’s generally damaging to one’s reputation when a world-famous billionaire erroneously calls you one of the worst things anyone could possibly be.  So Unsworth sued for defamation.

Defamation in the United States is actually quite difficult to prove.

In order to win a defamation case in the US, the claimant has to demonstrate that you knowingly said something false, or that you completely disregarded whether or not something was false.

It’s pretty clear that Musk knew his comments were false; he acknowledged that Unsworth is not a pedophile.

But winning a defamation case in the US also requires proving that Musk had the deliberate intent to harm Unsworth’s reputation.  And that’s tough to do.

Musk claimed he was just engaging in ‘idle trash talk’ and didn’t actually intend to harm Unsworth’s reputation.

If the case had been held in the United Kingdom, Musk would have lost in a heartbeat.

English defamation law is totally different than in the US; in the United Kingdom, if you say something, you have to be able to back it up. And Elon would have had to prove that his comments were accurate (they weren’t).

It’s a huge difference. And Musk was fortunate to find a sympathetic jury in Los Angeles, because they ruled in his favor.

But the really interesting thing about this trial was what Musk disclosed about his personal finances.

He told the jury under oath that, despite being worth more than $25 billion, he actually has very little money.

That’s because Musk’s wealth is both illiquid AND unprofitable.

He owns around 20% of Tesla, for example, which is worth about $13 billion. But he can’t really sell his shares… for a number of reasons. They’re controlled by a trust. He has regulatory limitations. Many of his shares are either restricted or are already pledged.

This isn’t unique to Musk; Warren Buffett is the largest shareholder of his company Berkshire Hathaway, and he’s never sold a single share.

(Buffett’s stake in Berkshire is worth roughly $90 billion.)

The difference is that Buffett’s company is consistently profitable and always generates positive cashflow.

Tesla has had a few good quarters here and there. But for the most part the company has lost more than $10 billion in cumulative NEGATIVE free cash flow over the past decade.

Buffett’s net worth is derived from his company’s financial performance. Berkshire Hathaway has over $100 billion in CASH on its balance sheet and generated nearly $40 billion in Free Cash Flow last year. Buffett owns a huge piece of that success.

Tesla has tiny amount of cash by comparison, a growing pile of debt, and lost a billion dollars last year.

So Elon’s 20% stake in Tesla means that he has a 20% share of last year’s billion dollar loss.

Investors continue to believe that there’s value in Tesla’s financial misery. But that doesn’t put any money in Elon’s pocket.

And he’s definitely not the only ‘billionaire’ in this situation. All across Silicon Valley (and much of the world) we see tech entrepreneurs loaded up with shares of their loss-making businesses, but short on any actual money.

The founder of Snapchat is worth more than $3 billion thanks to his company’s stock price; yet the business has lost billions of dollars since inception and has never generated positive cash flow in a single year, ever.

Uber, WeWork, Lyft, Slack, Peloton, Pinterest– there are so many tech companies, or companies masquerading as tech companies– that consistently lose tons of money. It’s absurd.

In finance, a startup that eventually becomes worth more than a billion dollars is referred to as a ‘unicorn’ because it’s supposed to be so rare that it borders on impossible.

Now, I remember my parents taking me to the circus when I was a kid, and the feature attraction was supposed to be a unicorn. I must have been around 4 years old and I couldn’t have been more excited.

Finally, after seeing the bearded lady and the lion tamers and all that jazz, they finally paraded the unicorn out for all the spectators to see.

Even as a little kid I knew instantly– it was just a friggin’ donkey with a fake horn on it.

And that’s basically what these companies are– donkeys with fake horns. They’re not real unicorns.

They bleed cash. Many of them have no hope of ever turning a profit. And the rock-star famous people who own them are often just “Billionaires In Name Only,’or BINOs.

We live in a world where central bankers have conjured trillions of dollars out of thin air and have even made interest rates NEGATIVE in a number of countries.

Well, when interest rates are zero (or negative) and central bankers create money at will, it means that money has no value anymore.

And this is the result: you can become a ‘billionaire’, at least on paper, without your company ever generating a single penny of profit, or even having a plan to turn a profit in the future.

I also read this morning that, over the weekend at an art fair in Miami, someone paid $125,000 for a piece of ‘art’ that was nothing more than a banana duck-taped to the wall.

That’s pretty much the equivalent of lighting your money on fire… and another extreme example of how little people value and respect capital anymore.

I’ve learned over the years that it’s a fool’s errand to predict a ‘top’. This sort of absurdity always lasts longer than anyone can possibly imagine.

But it always comes to an end. It won’t happen today, and it probably won’t happen tomorrow. But at some point this madness will stop.

Tyler Durden Tue, 12/10/2019 - 17:25
Published:12/10/2019 4:37:31 PM
[Markets] MarketWatch First Take: What Amazon is really accusing Trump of doing in JEDI deal The conspiracy theory at the heart of Amazon.com Inc.’s lawsuit over its loss of the $10 billion JEDI contract is another example of more possibly unethical tactics by the Trump administration.
Published:12/10/2019 4:37:31 PM
[Markets] Three Major Imbalances – Financial, Trust, & Geopolitical Three Major Imbalances – Financial, Trust, & Geopolitical

Authored by Mike Krieger via Liberty Blitzkrieg blog,

But greed is a bottomless pit
And our freedom’s a joke
We’re just taking a piss
And the whole world must watch the sad comic display
If you’re still free start running away
Cause we’re coming for you!

– Conor Oberst, “Land Locked Blues”

It’s hard to believe 2020 is just around the corner. If the last ten years have taught us anything, it’s the extent to which a vicious and corrupt oligarchy will go to further extend and entrench their economic and societal interests. Although the myriad desperate actions undertaken by the ruling class this past decade have managed to sustain the current paradigm a bit longer, it has not come without cost and major long-term consequence. Gigantic imbalances across multiple areas have been created and worsened, and the resolution of these in the years ahead (2020-2025) will shape the future for decades to come. I want to discuss three of them today, the financial system imbalance, the trust imbalance and the geopolitical imbalance.

Recent posts have focused on how what really matters in a crisis is not the event itself, but the response to it. The financial crisis of ten years ago is particularly instructive, as the entire institutional response to a widespread financial industry crime spree was to focus on saving a failed system and then pretending nothing happened. The public was given no time or space to debate whether the system needed saving; or more specifically, which parts needed saving, which parts needed wholesale restructuring and which parts should’ve been thrown into the dustbin. Rather, unelected central bankers stepped in with trillions in order to prop up, empower and reward the very industry and individuals that created the crisis to begin with. There was no real public debate, central bankers just did whatever they wanted. It was a moment so brazen and disturbing it shook many of us, including myself, out of a lifetime of propaganda induced deception.

It’s ten years later and central banks still can’t walk back anything they did over the past decade. It’s why the ECB is pushing lower into negative interest rate territory and restarting QE. It’s why the Federal Reserve is increasing its balance sheet as if we’re in the middle of a depression.

Recent actions by the ECB and Federal Reserve make it clear that, despite protestations to the contrary, the financial system is more sick and vulnerable than ever. A system with a healthy, functioning structure doesn’t require such interventions, but keeping this financial Potemkin village afloat is crucial to maintaining the key source of power and privilege for corrupt plutocrats, so no expense is spared. Nevertheless, these interventions makes the system weaker and more fragile than before, since they merely cover up ever increasing levels of corruption and fraud and permit more destructive behavior to continue surreptitiously under the surface. The current financial asset bubble on a global basis is likely the largest and most deadly in human history, and central bank actions of late seem to indicate they know this to be true.

While massive and global, the financial system imbalance is just one of several.

Another big one is a trust imbalance, which manifests as a widening disconnect between established institutions and the people living under them. As the ruling class has been forced to resort to increasingly desperate measures over the past decade to keep their gravy train going, they’ve exposed themselves more explicitly. What was once derided as conspiracy theory rapidly becomes conspiracy fact, and an increasingly significant number of humans have begun to simply assume (for good reason) that whatever comes out of the mouths of authority figures like intelligence agencies, politicians, mass media, corporations and think tanks, etc., are lies.

This situation isn’t getting any better either. It seems every day we wake up to new in your face revelations of how craven and dishonest the ruling oligarchy and its institutions really are. For example, this past weekend we learned how a Newsweek journalist quit because his bosses at the paper refused to let him publish about OPCW whistleblowers who dispute the official conclusion that Assad launched a chemical attack in Douma, an event that increasingly looks like a false flag event which led to the U.S. bombing Syria.

It was a busy weekend, as we also heard Nancy Pelosi admit she knew the George W. Bush administration lied the country into the Iraq war, but she somehow doesn’t consider that an impeachable offense.

Finally, just yesterday we learned government officials have been lying about progress in the Afghanistan war over the course of multiple administrations.

The interviews were carried out by the Special Inspector General for Afghanistan Reconstruction for their “Lessons Learned” intuitive; the head of SIGAR concluded that “the American people” were “constantly lied to” about the conflict to make it seem like America was making real progress in fixing the country. The Post report noted that Presidents George W. Bush, Barack Obama, and Donald Trump all conveyed these lies to ensure that the public perception of the Afghanistan war remained as positive as possible.

The national security state has forced the public to spend over $1 trillion murdering people abroad in the longest war in U.S. history based on government lies. The depressing thing is this isn’t even shocking or surprising.

Meanwhile, nobody believes Epstein killed himself.

The trust imbalance between rulers and the ruled has become so massive it’s all but guaranteed to detonate in a variety of unexpected and consequential ways in the years ahead. The election of Donald Trump was just the first pubic manifestation of this well deserved lack of trust.

The reason the corrupt oligarchy must constantly lie to the public is to convince us we live in a world that doesn’t exist. We’re not supposed to recognize the U.S. doesn’t function as a constitutional republic, but as an imperial oligarchy. This knowledge is the forbidden fruit of empire the public must never taste.

As William S. Smith explained in his excellent article, Welcome To The Potemkin Village Of Washington Power:

Tufts law professor Michael Glennon points out in a recent essay in Humanitas that the Cold War brought something new and ominous in military-civilian relations. The national security bureaucracy became so large and omnipotent that the Madisonian branches of government became something like the British House of Lords, symbolically important but in reality without much power. The executive, legislature, and judiciary became a kind of Potemkin village, with real national security power lodged in, as Glennon describes it, “a largely concealed managerial directorate, consisting of the several hundred leaders of the military, law enforcement and intelligence departments.” As this bureaucracy grew, Glennon argues, “those managers…operated at an increasing remove from constitutional limits and restraints, moving the nation slowly toward autocracy.”

Glennon also points out that, prior to Trump, there was an unwritten pact between the bureaucracy and the Madisonian government: never publicly disagree. While national security policies have long been crafted and maintained by deep state bureaucracies, everyone played along and told the public these were the result of “intense deliberations.” Yet a few people noticed that, whether under Republican or Democrat administrations, national security policies never really changed, intelligence operations were never disrupted, and even peacenik-seeming presidential candidates became warlike presidents. For decades, neither elected officials nor bureaucratic leaders publicly acknowledged that American national security policy was being run by what Glennon describes as a “double government,” with elected officials largely impotent. 

Not exactly what you were taught in school, and as more people start to recognize the disconnect between what they’ve been told and how things actually work, the trust imbalance grows. It’s already at highly charged levels, and like financial system imbalances, could blow at any moment.

The other major imbalance I want to highlight is the geopolitical one. It’s something I’ve been writing about a lot lately as it’s come into clearer focus that the nexus of this tension will center around the U.S. and China. At the root of this imbalance is a U.S. national security state desperate to turn back to clock to the 1990s when the U.S. was the world’s sole superpower and could essentially call the shots on all matters of international significance with little to no pushback. Certain foreign power centers, led by China and Russia, have made it explicit they will not be rewinding the clock and are have focused their foreign policy around ushering in a multi-polar world. Like the other imbalances, the geopolitical imbalance becomes more volatile and less manageable with each passing day.

Many writers and thinkers are doing a lot of good work analyzing these imbalances in isolation, but they need to be seen as interconnected parts of the same macro trend of paradigm disruption. These imbalances play off one another, and it’s highly likely that when one blows the others will follow soon after. In other words, it’s likely a future severe economic downturn will be coupled with civil unrest and heightened geopolitical conflict happening simultaneously. What sparks the chain reaction is unknown, but the 2020-2025 period is when it will likely occur.

Everything being done today centers around propping up and extending a decrepit paradigm in order to further enrich and empower a ruling class that has lost the respect of the people. As the actions taken to sustain such a system become more desperate and mendacious (“this is NOT QE”), the more the veneer of credibility disappears. The more the veneer of credibility disappears, the more unstable these major imbalances become. Generational change is on the horizon, keep your eyes wide open.

*  *  *

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Tyler Durden Tue, 12/10/2019 - 16:45
Tags
Published:12/10/2019 4:07:00 PM
[Markets] Stocks end lower for second day ahead of Fed rate decision, U.S.-China trade deadline U.S. stocks ended slightly lower for a second day on Tuesday, after erasing earlier gains, as Wall Street weighed U.S-China trade negotiations. Published:12/10/2019 4:07:00 PM
[Markets] Personal Finance Daily: The No. 1 job of 2019 pays $140,000 and this is the newest frontier for financial advice Tuesday's top personal finance stories
Published:12/10/2019 4:07:00 PM
[Markets] U.S. stocks finish lower as trade deadline looms U.S. stocks finish lower as trade deadline looms Published:12/10/2019 3:34:59 PM
[Markets] US STOCKS-Wall Street slips as tariff deadline closes in Wall Street's main stock indexes ended slightly lower on Tuesday, though not far from record highs, as investors awaited concrete news on whether a new round of U.S. tariffs on Chinese goods would take effect on Dec. 15, a potential turning point in a trade dispute between the world's two largest economies that has convulsed markets. Stock futures got a boost in premarket trade when the Wall Street Journal said U.S. and Chinese trade negotiators were laying the groundwork for a delay in the tariffs, but White House economic adviser Larry Kudlow said later that no decision had been made. The Dow Jones Industrial Average fell 27.88 points, or 0.1%, to 27,881.72, the S&P 500 lost 3.44 points, or 0.11%, to 3,132.52 and the Nasdaq Composite dropped 5.64 points, or 0.07%, to 8,616.18. Published:12/10/2019 3:34:59 PM
[Markets] US Military Grounds 300 Saudi Aviation Students After Pensacola Shooting Spree US Military Grounds 300 Saudi Aviation Students After Pensacola Shooting Spree

Following the shooting spree last week at the Naval air station in Pensacola, Fla. last week by 2nd Lt. Mohammed Saeed Alshamrani, who shot and killed three people, Reuters reports that roughly 300 Saudi Arabian military aviation students have been grounded as part of a "safety stand-down."

“A safety stand-down and operational pause commenced Monday for Saudi Arabian aviation students,” Navy spokeswoman Lt. Andriana Genualdi told Reuters.

Genualdi said the grounding included three different military facilities: Naval Air Station Pensacola, Naval Air Station Whiting Field and Naval Air Station Mayport, all in Florida; adding that while it was unclear when the Saudi students would be allowed to fly again, their classroom training was expected to resume soon.

There are currently about 850 Saudi students in the United States for military training.

The FBI has said that it believes the Saudi airman acted alone, and military leaders careful to portray this as a localized issue which would not affect the overall U.S.-Saudi relationship.

Of course, we are sure this will inflame the left as claims of racism will scream across Twitter faster than bullets from an M16.

Tyler Durden Tue, 12/10/2019 - 16:28
Published:12/10/2019 3:34:59 PM
[Markets] Investors shift attention to next generation of CAR-T, new sickle cell treatments at major hematology meeting A handful of sickle cell disease treatments and CAR-T therapies that treat cancer have been approved by the Food and Drug Administration in recent years, but a new crop of investigational therapies that would grow those markets is exciting investors.
Published:12/10/2019 3:34:59 PM
[Markets] Top stock picks for 2020: The best of the biggest DEEP DIVE (This is the first in a three-part series listing highly rated stocks that sell-side analysts expect to rise the most over the next 12 months. This article covers large-cap stocks.) What a difference a year makes. Published:12/10/2019 3:05:05 PM
[Markets] FA Center: These books aren’t about money— but they can change how you think about it Financial planners have learned about themselves from these authors, and you can too.
Published:12/10/2019 3:05:04 PM
[Markets] Stocks, Bonds, & Dollar Stumble As Traders Reach 'Peak FOMO' Stocks, Bonds, & Dollar Stumble As Traders Reach 'Peak FOMO'

There's no better proxy for the traders' level of FOMO-ness, it is the beta between momo funds and the market, and as Bloomberg notes, it is sitting near its highest level in almost two years.

Source: Bloomberg

Cause or effect - Peak FOMO is occurring along with Peak Fed balance sheet expansion...

But... while hedgies are chasing the market with everything they have... others are buying extreme downside protection with both hands and feet...

Source: Bloomberg

The Other Top...

But none of that stopped China from rallying overnight...

Source: Bloomberg

And European stocks recovered most of Monday's losses...

Source: Bloomberg

US Majors slipped lower again on the day (despite plenty of vol-creating trade headlines)...

Source: Bloomberg

But futures show the real chaos...

NOTE how VWAP (blue line) was key trend change level all day

And stocks just kept decoupling from bonds

Source: Bloomberg

Another short-squeeze was engineered off trade headlines at the open... but again it lost its mojo...

Source: Bloomberg

Bank stocks continue to relatively outperform despite the yield curve's collapse in the last couple of days...

Source: Bloomberg

Treasury yields were higher on the day with the short-end notably underperforming...

Source: Bloomberg

Flattening the yield curve dramatically...

Source: Bloomberg

The Dollar dropped for the 7th day in the last 8 to its lowest since Nov 5th...

Source: Bloomberg

Yuan rallied off the fix on optimistic traiff delay headlines...

Source: Bloomberg

Cryptos continue to slide...

Source: Bloomberg

Commodities were all higher on the day, but copper leads on the week...

Source: Bloomberg

WTI remains in its rising channel ahead of tonight's inventory data...

The year’s best-performing major commodity is showing no signs of slowing. Bloomberg points out that Palladium topped $1,900 an ounce for the first time ever on Tuesday after South African mining companies halted operations in response to the country’s power cuts.

Source: Bloomberg

Tight supplies and stricter vehicle-emissions rules have fueled a string of record highs for the metal used in autocatalysts, with Citi seeing prices jumping to $2,500 by mid-2020.

Palladium is up over 50% YTD...

Source: Bloomberg

Finally, as we noted previously, recession fears have disappeared from the headlines... in a rather ominous way...as the last time this happened was the summer of 2008...

Source: Bloomberg

And as we all anxiously await Powell's prognostications tomorrow, the market is pricing just a 0.2% chance of a rate-cut...

Source: Bloomberg

As stocks rallied in the last week, the market priced out more and more dovishness...

Source: Bloomberg

But most importantly, the cost of balance sheet across the turn is soaring - just as we warned it would...

Something is breaking in leveraged balance-sheet-land.

Tyler Durden Tue, 12/10/2019 - 16:01
Published:12/10/2019 3:05:04 PM
[Markets] Baker Hughes Stock Is a Top Idea at Bank of America. That’s Good For GE. Analyst Chase Mulvehill put Baker Huges on Bank of America’s “U.S. 1” list—a collection of the bank and brokerage firm’s best ideas. General Electric has more than $8 billion worth of Baker shares. Published:12/10/2019 2:38:52 PM
[Markets] Baby GATT Back: The End Of The World Trade Organization? Baby GATT Back: The End Of The World Trade Organization?

Submitted by Hugo Erken, head of International Economics at Rabobank

The WTO Appellate Body crisis

  • On 10 December, two members of the highest dispute settlement body of the World Trade Organisation, the Appellate Body, are retiring. As the US has been blocking the appointment of new members since 2017, the Appellate Body, as of today, won’t be able to fulfil its tasks

  • The shutdown of the Appellate Body carries the risk that the entire dispute mechanism of the WTO collapses

  • The discontent of the US with the WTO’s dispute settlement system (DSS) is not new. The US is especially dissatisfied with judicial overreach, the WTO’s rulings in anti-dumping cases and the slow process of the entire DSS. However, the data shows that the US is not in a disadvantageous position vis-à-vis other countries in the rulings of the WTO

  • Hence, a more strategic reason to strip the Appellate Body of its powers is that the US wants to settle international disputes again according to the GATT regime, the predecessor of the WTO. Under GATT, large trading blocs will have the upper hand over smaller ones and dictate the rules of the trading game

What has happened?

On 10 December, two member of the highest body of the dispute settlement system (DSS) of the World Trade Organization (WTO), the Appellate Body, are retiring. What is problematic is that since 2017 the United States has blocked the appointment of new members to this body, because it is dissatisfied with the way the Appellate Body operates. All WTO members must agree with the appointment of new members and the US has used its veto. Under normal circumstances, the Appellate Body has seven members who review cases. But, due to the US blockage, the number of members has gradually declined over the last two years to only three members in the last couple of months, which is the minimum requirement for the Appellate Body to review cases. As of today, the Appellate Body has insufficient members to fulfil its task.

Choking off funding

The US also has cranked up the pressure on the Appellate Body by choking off its funding. In order to secure the WTO’s preliminary Budget for 2020, members states complied to the US demand to lower the annual spending of Appellate Body members by 87% and the operating fund by 95%.

How does the dispute settlement system work?

With the founding of the World Trade Organisation in 1995, countries have also agreed to forge a judicial framework to formalise the way disputes between member states are resolved. The Dispute Settlement Understanding (DSU) sets out the procedures under the flag of the WTO. If consultation among quarrelling WTO members has failed to produce a solution, the case is taken to an ad hoc dispute panel, whose decisions are binding unless appealed. Cases that are appealed, are brought before the Appellate Body. The Appellate Body is only able to rule over the dispute panel’s legal findings and conclusions. The Appellate Body report is final and legally binding and the defending country must bring itself in conformity with WTO obligations within a ‘reasonable period of time’. If a defending party fails to implement a panel or Appellate Body decision, the complainant party may be given the right to respond with protectionist measures. This was for instance the case in the Airbus dispute early October of this year, where the WTO ruled that European airplane manufacturer Airbus received illegal subsidies. As a result, the WTO authorized the United States to impose retaliatory tariffs of 100% on USD 7.5bn worth of export products from the EU.

An Appellate Body in limbo

With a total case load exceeding 600 cases since the start of the WTO in 1995, the DSS is probably the busiest international dispute settlement system in the world. The Appellate Body has an extremely important task within this system, as two thirds of the disputes are appealed. All in all, the Appellate Body could be seen as the Supreme Court of trade rulings or the international arbiter of trade. However, now that this body has been shut down and at the same time is choked off important funding sources, the entire dispute mechanisms of the WTO is at risk. In his farewell speech, departing Appellate Body member Peter Van den Bossche said: “One can predict with confidence that, once the Appellate Body is paralyzed, the losing party will in most cases appeal the panel report and thus prevent it from becoming legally binding. Why would WTO members still engage in panel proceedings if panel reports are likely to remain unadopted and thus not legally binding? As from 11 December 2019, it is therefore not only appellate review but also the entire WTO dispute settlement system that will no longer be fully operational and may progressively shut down."

Why is the US asphyxiating the WTO’s dispute settlement system?

The discontent of the US with the WTO’s dispute settlement system, and the Appellate Body in particular, is not something that has been solely brought to the fore by the Trump Administration. In fact, there has been a litany of US-led complaints over the last decade (see here for a reconstruction). There are three reasons which are important to address and which illustrate the frustration of the US:

  1. Judicial overreach: the US has criticized the judicial overreach of the Appellate Body in interpreting WTO law. This covers a numbers of problems, for instance the practice by the Appellate Body to follow previous rulings. Moreover, the US has argued that the Appellate Body takes an overly broad view of matters that it can deal with. For instance, the US would like to adopt protectionist measures as a means to curb the negative impact of tradedistorting subsidies provided to state-owned enterprises (see here). This complaint of course relates to China’s growth model. But a number of Appellate Body interpretations have prohibited the US from installing such trade barriers.
  2. Anti-dumping: another topic which has led to frustrations in Washington is that the US has lost 93% of all anti-dumping cases (2 out of 29) which have been reviewed by the WTO (see here).
  3. Slow process: all stages of the dispute settlement process should take no longer than 18 to 19 months, if we take into account an extended panel period and appeal period. In practice, however, the duration of proceedings has reached an average of almost 34 months (see Reich, 2017).

Is the action by the US proportionate?

The question of course is whether asphyxiating the WTO’s dispute settlement system is the appropriate way to safeguard US interests. Although the dispute settlement system is far from flawless, endangering the existence of the Appellate Body is perhaps not proportionate.

Moreover, to avoid the situation we are currently facing, WTO members have continuously been working on reform proposals, but thus far neither seem to have pleased the US, leading to the deadlock that we are facing today. Peter Van den Bossche says: “It is, however, not clear to me, whether any reform of the current system, short of its virtual elimination, will satisfy the United States.”

What do the data tell us?

If we look at the data, both the US and the EU are by far the biggest users of the DSS. Over the course of time, the US has filed 132 cases as complainant and was defendant in 164 cases (Figure 1). Of the complaints it has filed, the US has won 90% of the cases (see Jacques Delors Institute, 2018), but at the same time it is also the country that loses the most cases in which it is respondent. All in all, the win/lose ratio does not differ much from that of other countries.

Strategic reasons

So the data does not show that the US is in a disadvantageous position vis-à-vis other countries in the ruling of the WTO. At the same time, the shutdown of the Appellate Body is quite drastic, which fuels the suspicion that there must be a more strategic reason for the US to take these draconian measures.

And on this we can obviously only speculate, but one motivation could be that the US wants to settle international disputes again according to the GATT (General Agreement on Tariffs and Trade) regime, which is the predecessor of the WTO. With the Appellate Body in limbo and DSS likely to collapse, trade disputes would have to be settled again under that regime. Under GATT, disputes were not resolved within a judicial formalised framework (with legally binding rulings), but had to be resolved the diplomatic way. This means we are shifting to a more power-oriented regime, rather than a law-oriented one. Especially large countries could block rulings under the GATT regime, without being penalised. Indeed, McGivern (2002) argues that the complaining country could only retaliate by consent of all GATT Contracting Parties, includes the defendant, which ensure that retaliation under GATT was completely absent. This perspective might sound interesting to the US Administration and is in line with its ‘America First’ doctrine, as large trading blocs will have the upper hand over smaller ones and dictate the rules of the trading game.

Trade powerplay

If countries are not able to persuade the US to lift the blockage on the appointment of Appellate Body members, the world will lose its international legal trade arbiter (i.e. the Appellate Body) and the dispute settlement system will likely collapse in a short period of time. Meanwhile the EU is trying to patch the broken system, by copying the Appellate Body framework and rallying partners to join this temporary appeal system voluntarily. Norway and Canada have agreed to join, but the US, China and India have refused.

If the current issues are not resolved in a reasonable time frame, this implies that, in the future, countries will have to settles trade disputes again according to the GATT regime, which generally means trade rules will be dictated by the most powerful countries. Especially smaller countries will lose out, as larger countries can simply ignore a ruling against them without repercussions. This is a fate that may befall smaller emerging market economies and could expose their vulnerabilities. Many smaller European countries, such as the Netherlands, are protected by overarching EU framework under which they operate. The United Kingdom, on the other hand, is already vulnerable due to Brexit and the current course of events will likely impinge on its trade perspectives even more.

Tyler Durden Tue, 12/10/2019 - 15:30
Published:12/10/2019 2:38:52 PM
[Markets] GLOBAL MARKETS-Stocks, government debt flat as U.S.-China trade deadline looms Government debt and global stock markets held steady on Tuesday as uncertainty kept risk appetite in check days ahead of the Dec. 15 deadline for a new round of U.S. tariffs on Chinese imports. Prospects for an initial "phase one" trade deal look good, acting White House Chief of Staff Mick Mulvaney said at a Wall Street Journal event. Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey, said the mixed signals were typical, but he also sounded a note of caution. Published:12/10/2019 2:08:57 PM
[Markets] Caracas Caves, Releases Jailed American Citgo Executives Caracas Caves, Releases Jailed American Citgo Executives

Authored by Irina Slav via OilPrice.com,

Venezuela has released six Citgo executives who were arrested and sent to jail on charges of corruption two years ago, Reuters reports, citing unnamed sources.

The prison sentences have apparently been replaced with house arrest, the source said.

The executives - all of them U.S. citizens, five of them with dual citizenship - were first arrested in 2017 and were only brought to court in the middle of 2019, after 18 months in prison. During that hearing, the presiding judge accepted the prosecution’s request for a trial on corruption charges without setting a date.

At the time of the arrest, U.S. authorities requested that its nationals be released, but Venezuela’s President Nicolas Maduro refused, saying

“These are people born in Venezuela, they’re Venezuelan and they’re going to be judged for being corrupt, thieving traitors.”

According to opposition sources, however, the arrests were not about corruption, but about infighting in the Communist Party as well as an attempt by the government to get its hands on profitable companies to patch up its budget, currently in tatters and with no great improvement prospects.

Reuters reports that U.S. Vice-President Mike Pence and two senators had called on Maduro to release the Citgo executives on worry about their health, after Pence earlier this year met with the families of the arrested men who asked for the U.S. government’s help in the matter.

According to the sources, the six executives—including five former vice presidents of Citgo and a former president—will be banned from leaving Venezuela. No reasons for the release have been provided by Venezuelan authorities.

Citgo, in the meantime, has passed under the control of opposition leader Juan Guaidó with the help of Washington, which was the first government to recognize Guaidó as the legitimate, albeit interim, president of Venezuela, after earlier this year he declared himself interim president until new elections are called.

Tyler Durden Tue, 12/10/2019 - 15:01
Published:12/10/2019 2:08:57 PM
[Markets] Biotech stocks are producing outsized gains — here’s how to get your share An evergreen strategy is to buy stocks of companies that are likely to be bought out at attractive premiums.
Published:12/10/2019 2:08:57 PM
[Markets] Diesel Demand Slump Signals Manufacturing Recession Is Still Raging Diesel Demand Slump Signals Manufacturing Recession Is Still Raging

The U.S. economy is decelerating into an election year and could print below-trend growth by 2H20.

Manufacturing, employment, and inflation have all been in downturns for one year, hence why the Federal Reserve has been quick to slash interest rates, as President Trump has been begging for negative interest rates, quantitative easing, and emergency tax cuts.

New data from Reuters' John Kemp shows how manufacturing continues to decelerate into year-end as there's little evidence that growth will trough and zoom higher in early 2020.

Kemp says waning diesel consumption is a significant warning sign of manufacturing output continuing to contract and volume of freight plunging. These factors have put downward pressure on spot oil prices.

U.S. Energy Information Administration (EIA) data shows consumption of diesel was down 3% in Q3 versus a year earlier.

Kemp notes that diesel is used by "trucking firms, railroads, manufacturers, construction firms, oil and gas drillers, and farmers, so diesel consumption is tightly coupled with the manufacturing cycle."

He said the drop in diesel consumption relative to gasoline shows that the manufacturing recession is worsening as the consumer is generating slower growth.

Consumption growth of diesel has plunged across the world.

Manufacturing downturns in China, India, Europe, South America, and the U.S. have contributed to declining demand.

As the global economy decelerates into 2020, diesel demand will continue to decline, forcing oversupplied conditions and lower prices.

Tyler Durden Tue, 12/10/2019 - 14:15
Published:12/10/2019 1:33:56 PM
[Markets] Outside the Box: Americans keep gorging on debt, thanks to the Federal Reserve Even only a slight increase in interest rates creates millions more in interest payments for consumers.
Published:12/10/2019 1:33:56 PM
[Markets] Stock market bounces around as investors weigh state of U.S-China trade talks U.S. stocks swung from losses to gains on Tuesday as Wall Street weighs U.S-China trade negotiations. Published:12/10/2019 1:04:10 PM
[Markets] How to give more than lip service to people who are homeless this holiday season ‘Wage inequality, racial inequities and a severe shortage of affordable rental homes leave too many vulnerable people unable to afford their housing.’
Published:12/10/2019 1:04:10 PM
[Markets] Horowitz Report Is "Triumph" For FISA Abuse 'Whistleblower' Devin Nunes: WSJ's Kim Strassel Horowitz Report Is "Triumph" For FISA Abuse 'Whistleblower' Devin Nunes: WSJ's Kim Strassel

In her usual succinct and clarifying manner, The Wall Street Journal's Kimberley Strassel took to Twitter overnight to summarize the farcical findings within the Horowitz Report (and Barr and Durham's responses).

In sixteen short tweets, Strassel destroyed the spin while elucidating the key findings of the Horowitz report (emphasis ours):

Yup, IG said FBI hit threshold for opening an investigation. But also goes out of its way to note what a "low threshold" this is.

Durham's statement made clear he will provide more info for Americans to make a judgment on reasonableness.

The report is triumph for former House Intel Chair Devin Nunes, who first blew the whistle on FISA abuse. The report confirms all the elements of the February 2018 Nunes memo, which said dossier was as an "essential" part of applications, and FBI withheld info from FISA court

Conversely, the report is an excoriation of Adam Schiff and his "memo" of Feb 2018.

That doc stated that "FBI and DOJ officials did NOT abuse the [FISA] process" or "omit material information."

Also claimed FBI didn't much rely on dossier.

In fact, IG report says dossier played "central and essential role" in getting FISA warrants.

Schiff had access to same documents as Nunes, yet chose to misinform the public. This is the guy who just ran impeachment proceedings.

The Report is a devastating indictment of Steele, Fusion GPS and the "dossier."

Report finds that about the only thing FBI ever corroborated in that doc were publicly available times, places, title names. Ouch.

IG finds 17 separate problems with FISA court submissions, including FBI's overstatement of Steele's credentials. Also the failure to provide court with exculpatory evidence and issues with Steele's sources and additional info it got about Steele's credibility.

Every one of these "issues" is a story all on its own.

Example: The FBI had tapes of Page and Papadopoulos making statements that were inconsistent with FBI's own collusion theories. They did not provide these to the FISA court.

Another example: FBI later got info from professional contacts with Steele who said he suffered from "lack of self awareness, poor judgement" and "pursued people" with "no intelligence value." FBI also did not tell the court about these credibility concerns.

And this: FBI failed to tell Court that Page was approved as an "operational contact" for another U.S. agency, and "candidly" reported his interactions with a Russian intel officer. FBI instead used that Russian interaction against Page, with no exculpatory detail.

Overall, IG was so concerned by these "extensive compliance failures" that is has now initiated additional "oversight" to assess how FBI in general complies with "policies that seek to protect the civil liberties of U.S. persons."

The Report also expressed concerns about FBI's failure to present any of these issues to DOJ higher ups; its ongoing contacts with Steele after he was fired for talking to media; and its use of spies against the campaign without any DOJ input.

Remember Comey telling us it was no big deal who paid for dossier?

Turns out it was a big deal in FBI/DOJ, where one lawyer (Stuart Evans) expressed "concerns" it had been funded by Clinton/DNC. Because of his "consistent inquiries" we go that convoluted footnote.

IG also slaps FBI for using what was supposed to be a baseline briefing for the Trump campaign of foreign intelligence threats as a surreptitious opportunity to investigate Flynn.

Strassel's last point is perhaps the most important for those on the left claiming "vindication"...

When IG says he found no "documentary" evidence of bias, he means just that: He didn't find smoking gun email that says "let's take out Trump."

And it isn't his job to guess at the motivations of FBI employees.

Instead... He straightforwardly lays out facts.

Those facts produce a pattern of FBI playing the FISA Court--overstating some info, omitting other info, cherrypicking details.

Americans can look at totality and make their own judgment as to "why" FBI behaved in such a manner.

Finally, intriguing just how many people at the FBI don't remember anything about anything. Highly convenient.

Tyler Durden Tue, 12/10/2019 - 14:00
Published:12/10/2019 1:04:10 PM
[Markets] Mediocre 10Y Auction Sees Sharp Drop In Indirects As All Eyes Turn To Settlement Date Mediocre 10Y Auction Sees Sharp Drop In Indirects As All Eyes Turn To Settlement Date

Ahead of today's 10Y Treasury auction, there was some concerns that the Zoltan Pozser report  on an upcoming repo crash would spook buyers and we could get dismal demand as a result of the bond's Dec 16 settlement - same as the quarterly tax remittance day - when liquidity could potentially collapse as we enter the notorious month-end repocalypse 2.0. That did not happen, however, with the $24 billion reopening of CUSIP YS3, pricing at 1.842%, stopping 0.1bps through the When Issued, and slightly higher than last month's 1.809%.

The Bid to cover was unremarkable, sliding from 2.49 to 2.43, just above the six auction average 2.41. However, the internals were more concerning because even as Directs surged from 12.4% to 19.4%, the highest since January, it was the Indirects that offset this spike, the foreign takedown tumbling from 64.5% to just 56.1%, well below the 61.3% recent average and the lowest since August.

Still, in lights of Pozser's dramatic claim that the Fed is about to lose control of overnight rates resulting in a spike in yields, today's 10Y was hardly evidence of fears. Or perhaps buyers moved a step ahead, and were pricing in the upcoming QE4 that would inevitably follow a late-year market crash, as it would then allow them to flip today's purchase right back to the Fed at a generous profit. In any case, we have to wait until year end to see just how this dramatic liquidity tug of war plays out.

 

Tyler Durden Tue, 12/10/2019 - 13:19
Published:12/10/2019 12:34:05 PM
[Markets] Here’s what’s happening next in Democrats’ effort to impeach President Trump A vote on impeachment by the full House is widely expected to come before Christmas, putting the Republican-led Senate on track to try President Donald Trump in January. Published:12/10/2019 12:34:04 PM
[Markets] Peloton shares could be headed to $5, short-seller Citron Research says Peloton Interactive Software Inc. shares were down more than 6% in Tuesday trading after short-seller Citron Research penned a negative report on the maker of exercise equipment, arguing that its stock was headed for a slide of more than 80%.
Published:12/10/2019 12:34:04 PM
[Markets] AutoZone Soars, CVS Drops, and the Dow Does Almost Nothing At All The Dow Jones Industrial Average was near their break-even points after initially gaining on a report that the U.S. and China are planning to delay implementing tariffs that are scheduled to go into effect on Sunday. Published:12/10/2019 12:06:15 PM
[Markets] Schiff Blew It - Support For Impeachment Peaked In October Schiff Blew It - Support For Impeachment Peaked In October

Authored by Mike Shedlock via MishTalk,

Support for impeachment, regardless of political affiliation, peaked in October.

For a Brief Moment

Polls courtesy of FiveThirtyEight, anecdotes mine.

Partisan Brawl

The New York Times reports With White House Absent, Impeachment Devolves Into Partisan Brawl.

President Trump is refusing to engage and Democrats have concluded they will press ahead anyway, rendering a historic undertaking little more than a foregone conclusion.

Excuse me for pointing out the result was a foregone conclusion whether the White House was present or not.

“That is a tragedy,” said Philip Bobbitt, a Columbia University law professor and a leading expert on the history of impeachment. The framers of the Constitution were careful to design a process for removing a president from office that they hoped would rise above the nation’s petty political squabbles, he said.

Tragedy?

Yes, witch hunts are a tragedy. Republicans found that out when they foolishly went after Bill Clinton.

Boycott the Process

Neal Katyal, the former acting solicitor general under President Barack Obama, called it “deeply dangerous” for the target of an impeachment like Mr. Trump to simply boycott the entire process.

Does the law prohibit a boycott? Does the law require the president to testify against himself? Is it dangerous to accept the advice of legal council?

Rule Book

“The fact is that the House Democrats are essentially giving Trump the same process as previous presidents have received, and it’s Trump who is trying to throw out the rule book” and attack the process at every turn, he said. “Our founders put impeachment in the Constitution as a critical safeguard for the people, and what Trump is trying to do with these baseless attacks is read the impeachment clauses out of the Constitution.”

His response has been an all-out attack on the process itself. He has ordered administration officials not to testify or hand over documents. And he is urging Republicans not to cooperate with their counterparts the way they did during Mr. Clinton’s impeachment.

Excuse me for pointing out that the law is the rule book.

What law has trump violated by boycotting the process?

Shocking?

Of course it is.

Trump continually followed the advice of legal council instead of sticking his foot in his mouth and Tweeting about it.

Quite shocking.

Hijacking the Committee

Here's an interesting take.

Business Insider reports Republicans Hijacked the House Judiciary Committee's Impeachment Hearings and Turned them Into a Circus.

I expect better from the Business Insider than that kind of mushy nonsense.

The only way Republicans could "hijack" the hearings is if inept Democrats called on inept witnesses and Republican made them look like fools.

That is precisely what happened.

Democrat Impeachment Star Witnesses Useful as Dust

In case you missed it, please consider Democrat Impeachment Star Witnesses Useful as Dust

Click on that link for an amusing video and transcript.

Comments on the Unreal World

Back in the real world, or do I mean unreal world, I get accused of having TDS every time I attack Trump's idiotic trade policy.

I also get accused of being an extreme Left-Wing nutcase when I defend Trump.

The fact is, I don't like Trump but I voted for him and would again vs Hillary.

I am a staunch anti-war, fiscal conservative, Libertarian, who does not give a damn about anyone's race, religion, sex, or age. I believe in equal rights. I also believe in the right to choose. If two women or two men want to get married, I believe it's none of my business.

I believe that's a winning platform.

Alas, one cannot get nominated on that platform. Thus, I always have extreme voting compromises to make.

Independents the Key

The 2020 election will depend on independents.

Democrats may make the choice easy, as explained in How to Re-Elect Trump in One Easy Lesson.

Tyler Durden Tue, 12/10/2019 - 12:55
Tags
Published:12/10/2019 12:06:15 PM
[Markets] Upgrade: The No. 1 job of 2019 pays $140,000 — and its hiring growth has exploded 74% LinkedIn’s out with its 2019 list of “Emerging Jobs” to watch
Published:12/10/2019 12:06:15 PM
[Markets] Investment Grade Credit Faces Party Hangover In 2020 Investment Grade Credit Faces Party Hangover In 2020

Authored by Bloomberg macro commentator, Sebastian Boyd

Rising corporate leverage will shut down the investment-grade credit party in 2020 after posting a whopping 14% return in 2019. Making money in this space was easy after the 4Q 2018 sell-off and the Fed’s dovish shift at the start of January. Next year will be a very different story.

At the end of 3Q, the spread on the Bloomberg Barclays U.S. Corporate index was 115 bps, or 53 bps per median turn of leverage for the non-financial borrowers in it. That’s the lowest in 10 years. Muted expectations for corporate earnings suggest companies may struggle to deleverage.

Spreads haven’t returned to the lows they reached in 2018, but investment-grade yields tumbled. The last time they fell as steeply as they did this year was in 2009 and 2010, just after the Lehman Brothers bankruptcy.

Modified duration in the Bloomberg Barclays index is the highest since the late 1970s, and convexity is the highest in at least two decades. That’s a result of falling coupons and lower yields, and taken together it means high-grade debt is very sensitive to shifts in Treasury yields.

The amount of U.S. corporate bonds maturing in the next 12 months is greater than at any point since 2017, according to the Bloomberg Barclays Short Term U.S. Corporate index -- 97% of which is due in a year or less. Supply based on refinancing isn’t necessarily bad news for bondholders, except that it will likely come with lower yields.

While there has been spread decompression in high yield, we haven’t seen the same in investment grade. The gap between BBB and AA spreads is in line with the three-year average. But that’s not necessarily a good thing, since the last three years have been a time of exuberance and spread compression.

On the other hand, the flow story remains solid. In these days of low yields and rising risk, investment- grade credit appeals. Taiwanese life insurers are big buyers of Yankee bonds and are likely to remain a source of demand unless the Taiwan dollar significantly appreciates versus the greenback.

Despite rising leverage among investment-grade companies, cash flow has improved and credit-raters are being generous. The ratio of upgrades to downgrades has risen in recent quarters, which is hard to correlate with either growth or leverage.

The famous BBB time bomb hasn’t blown up yet. There are reasons to think it might not explode at all, helped by the benign attitude of ratings firms. The chart below shows how the leverage of companies currently rated BBB has been rising. A number of those were downgraded to BBB specifically because of rising leverage, so the picture may not be as bad as it looks. But what it does suggest is that those companies haven’t been deleveraging.

The BBB index paid 62 bps per median turn of leverage at the end of 3Q. That’s low historically but pretty much in line with where it has been since 2Q 2017. You’re not getting paid enough to own that risk, but you haven’t been for a while. On the other hand, the widening of BBBs versus BBs means the higher-grade bonds appear relatively cheap.

Taken together, it’s clear that the story of high-grade debt next year will be told through deleveraging. Yields tumbled in 2019, which helped spur a great year for investors, and borrowing likely will remain relatively cheap in 2020. Some will be able to profit from that. But leverage levels are elevated -- and it doesn’t look like companies will have the cash to substantially reduce their debt loads. Without a substantial deleveraging push, it’s hard to see what would enable the market to sustain it’s high.

Tyler Durden Tue, 12/10/2019 - 12:25
Published:12/10/2019 11:33:55 AM
[Markets] The Technical Indicator: Bull trend intact: S&P 500 absorbs December whipsaw Technically speaking, the S&P 500 has sustained a sharp reversal from one-month lows, a rally that likely neutralizes the early-December market downdraft, writes Michael Ashbaugh.
Published:12/10/2019 11:33:55 AM
[Markets] "We Totally Failed As A Business": Unicorn Scooter Impales Investors After Company Goes Hooves-Up "We Totally Failed As A Business": Unicorn Scooter Impales Investors After Company Goes Hooves-Up

It was a stupid idea at a terrible time; startup company Unicorn thought they could convince people to spend $699 on an electric scooter - as opposed to simply paying a few bucks each time they use one of the ubiquitous e-scooters littering cities across the country.

After blowing all the cash they raised from investors and pre-orders on Facebook and Google ads, CEO Nick Evans said in an email that the company had "totally failed as a business" and would "spread the cost of this failure to you, the early customers that believed in us."

In total, the company received just 350 pre-orders for the glossy white e-scooters, according to The Verge. And nobody is getting a refund, as "we are completely out of funding."

Unicorn emerged six months ago as part of a new crop of scooter startups hoping to capitalize on the popularity of dockless rental services like Bird and Lime, while also pitching itself as an affordable alternative to shared scooters. In addition to having a striking profile — the all-white look was really something — the scooter was loaded with a lot of high-tech bells and whistles, like GPS tracking and smartphone-enabled locking. Naturally it included integration with Tile, Evans’ other company, which uses Bluetooth to track lost items, like a wallet, keys, or phone. -The Verge

Evans' email reads;

We could have continued moving forward and taking more orders and that would continue to fund the business, and if we did that might have been able to deliver the product, but we also may have not been able to sell enough Unicorns, so by doing that we would be risking more people’s orders. So we made the very, very difficult decision to stop.

A large portion of the revenue went toward paying for Facebook ads to bring traffic to the site. A portion also went to our manufacturer in the form of a down payment to build the scooters, but unfortunately that down payment cannot be redeemed for a portion of the scooters that we were planning to order.

Unfortunately, the cost of the ads were just too expensive to build a sustainable business. And as the weather continued to get colder throughout the US and more scooters from other companies came on to the market, it became harder and harder to sell Unicorns, leading to a higher cost for ads and fewer customers.

"We are so, so very sorry," Evans concludes.

Not good enough, say some investors.

"I am upset he basically robbed everyone of his customers and is closing without delivering any scooters," wrote hopeful customer Rebecca Buchholtz to The Verge. "This was my daughters Christmas gift and now I cannot get her any gift."

"I find it shocking that someone like Nick Evans who has name recognition and clout in the tech community due to Tile, would operate in such a fraudulent way," wrote customer Matt Furhman, who said he's lost $998 after placing pre-orders for two scooters. He calls Evans a "thief."

Customers are advised to contact their credit card companies and dispute the charges from Unicorn.

In an email to The Verge, Evans said the company had received only around 350 orders. “I feel horribly guilty that we left people with no scooters and no refunds,” he said. “We are working on something, but, yes, this seems unlikely.” -The Verge

Unicorn is far from alone when it comes to e-scooter fails. Santa Cruz-based Inboard Technology is currently liquidating its assets and IP after trying their hand at electric scooters - laying off all 24 of their employees.

Tyler Durden Tue, 12/10/2019 - 11:44
Published:12/10/2019 11:04:13 AM
[Markets] GLOBAL MARKETS-Stocks, government debt flat as trade deadline looms Government debt and global stock markets held steady on Tuesday as uncertainty kept risk appetite in check just days ahead of a new round of U.S. tariffs on Chinese goods. Prospects for an initial "phase one" trade deal look good, acting White House Chief of Staff Mick Mulvaney said at a Wall Street Journal event. Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey, called the back and forth typical but also sounded a note of caution. Published:12/10/2019 11:04:13 AM
[Markets] Deep Dive: Top stock picks for 2020: The best of the biggest Most have underperformed the S&P 500 Index this year.
Published:12/10/2019 11:04:12 AM
[Markets] Stock-market gains as investors weigh state of U.S-China trade talks U.S. stocks bounce around Tuesday morning, but were attempting to hold on to gains, as Wall Street weighs U.S-China trade negotiations Published:12/10/2019 10:34:00 AM
[Markets] The Most Innovative Jobs In The U.S. Are Clustering In A Handful of Cities The Most Innovative Jobs In The U.S. Are Clustering In A Handful of Cities

Submitted by Market Crumbs,

The United States has a total area of 3,796,742 square miles. That makes it the third or fourth-largest country in the world by land area, depending if you count overseas territories. So what's the point? Despite its size, the U.S. is facing a dilemma of sorts. 

According to a new report from The Brookings Institution, regional divergence in the U.S. innovation sector "has reached extreme levels." The innovation sector, composed of 13 of the nation’s highest-tech, highest R&D industries, is vital to the U.S. economy. The innovation sector accounts for 3% of U.S. jobs, but generates 6% of the country’s GDP, a quarter of its exports and two-thirds of business R&D expenditures. The industries, such as software, pharmaceuticals and semiconductors, consist of workers with degrees such as science, technology, engineering and mathematics.

The report found that job gains in the innovation sector are becoming highly concentrated to a handful of "superstar" metropolitan areas. Boston, San Francisco, San Jose, Seattle and San Diego captured more than 90% of all new jobs in the innovation sector from 2005 to 2017. These cities' share of the nation’s innovation sector employment increased from 17.6% to 22.8% during this period. 

One-third of the nation’s innovation sector jobs are now in just 16 counties, with more than half concentrated in 41 counties. The hardest hit cities, in terms of losing innovation sector jobs over this period, include Chicago, Philadelphia, Dallas and Los Angeles. 

The report discusses some of the negative externalities as a result of innovation sector jobs clustering to a few cities. The most obvious is housing. A separate report from PropertyShark found that California is home to 73% of the nation’s priciest zip codes. The Bay Area alone is home to 55 of the nation's 125 most expensive zip codes. 

One of the other negative externalities the report focuses on is what it calls the "sorting of workers." This happens as college-educated workers are moving to a handful of cities, leaving those metro areas they've moved from with weaker talent pools. This can cause areas of underdevelopment, which in turn, can lead to broader social issues.

So what does The Brookings Institution suggest as a solution to this issue? They believe the U.S. government should counter this divergence by selecting eight to ten new “heartland” metro areas that can be transformed into "regional growth centers." The report provides a list of 35 metro areas that are ideal candidates for transformation. Madison, Wisconsin, the greater Minneapolis, Minnesota region and the greater Albany, New York region are listed as the most eligible locations. At an estimated cost of $100 billion over ten years, The Brookings Institution points out that it is "substantially less than the 10-year cost of U.S. fossil fuel subsidies." 

As Market Crumbs wrote yesterday, technology companies are expanding, but are increasingly heading to New York City. Doing so doesn't solve any of the issues The Brookings Institution identifies in its report. If the government takes their advice and tries to develop these regional growth centers, there is sure to be plenty of debate as Amazon's search for its HQ2 last year showed what happens when governments try to attract corporations.

Tyler Durden Tue, 12/10/2019 - 11:25
Published:12/10/2019 10:33:59 AM
[Markets] The Moneyist: ‘It’s NOT fair!’ — after 3 years of marriage, I’ll only inherit 10% of my husband’s $2M estate and the right to live in his home ‘After visiting with his daughter he made a new will with a trust. I also have to pay the expenses, which I probably can’t afford.’
Published:12/10/2019 10:33:59 AM
[Markets] Rabobank: "The Key Reason We Are In This Mess Is Due To Volcker" Rabobank: "The Key Reason We Are In This Mess Is Due To Volcker"

Submitted by Michael Every of Rabobank

Tall Tales

Markets were relatively quiet Monday, with key bond yields drifting lower to reverse Friday’s payrolls-induced spike, and the USD likewise reversing some its gain. Even equities ended slightly lower.

Perhaps the most eye-catching news was the sad death of former Fed Chair Paul Volcker. Besides his post-2008 regulatory ‘Volcker Rule’ being infamous to those working in markets, “Tall Paul” is being eulogised as the man “who broke the back of US inflation in the 1980s”. Even before his death others had stated that if there were a Nobel Prize for government serviced that his name would be on that list.

For those weaned on ultra-low rates and central-bank liquidity on demand, it must seem odd that once upon a time there was a Fed Chair prepared to raise rates to eye-watering levels regardless of the cost, who worked for tighter regulation after leaving office, and who publicly wanted to see big banks broken up. By contrast, yesterday saw the current Fed pump in another USD25bn in a 28-day repo operation yesterday – and USD43bn was bid for that USD25bn on offer (so many people so short of cash: is it all really a year-end squeeze?); and let’s not forget the weekend had that USD150,000 banana taped to a wall (up USD30,000 in a day because of the controversy over the first USD120,000 banana being eaten). For all the chatter that Jay Powell ‘was going to be the next Volcker’, the truth is that lower for longer will be lower forever if markets continue to require permanent liquidity support, which they still do a decade after the actual crisis ended.

However to think that we need a Volcker now is a “Tall tale”. Why? Because one also needs to underline that, ironically, the key reason we are in this mess is due to Volcker. He didn’t just break the back of US inflation: he also deliberately broke the back of US labour power. Recall that at the time of soaring US inflation the economy was dealing with the aftermath of an oil shock, the collapse of the Bretton Woods system, the messy end of the expensive Vietnam War, and the start of the US political mania for tax cuts for the wealthy as a cure-all. Most countries would have seen high inflation against that backdrop – and lots of potential policy-combinations might have worked as a palliative. (Tax hikes for the rich, for example, or an early refusal to allow the USD to assume its current global role as absorber of excess global capital and production.)

Volcker decided that the working class needed to pay the price of victory against inflation. He explicitly aimed at breaking the power of organised labour, and just after being appointed as FOMC Chair declared “The standard of living of the average American has to decline. When looking at the trend of median rea- wage stagnation in the US--something now broadly acknowledged as the root cause of most of our socio-economic problems, and of our distorted markets--this started with the first oil shock, and became entrenched under Volcker. Subsequent Fed Chairs, and indeed most central banks, may no longer be tough on rates and may doll out liquidity like candy – but not to workers, only to banks (and soon, perhaps, to shadow banks). Whatever the Fed does or doesn’t say at this week’s meeting, don’t expect that to change.

Which brings us neatly to the week’s other main event. In the UK, the Labour Party is running on as ‘anti-Volcker’ an economic manifesto as possible, and has been flailing in the polls. However, a viral clip of PM Boris Johnson, a renowned teller of tall tales, refusing to look at an image of a four-year old boy being treated for pneumonia on a hospital floor due to lack of beds is the exact opposite of what a Tory government which presided over a decade of austerity would want to see as the campaign lumbers to the finishing line; it wants the focus on a points-based immigration system post-Brexit (which is moderately ‘anti-Volcker’ in theory, although where used in Australia is still about as Volcker as it gets). Indeed, the Telegraph today claims an internal Tory memo warns Jeremy Corbyn is “much closer” to becoming PM than voters think due to tactical voting – which that viral clip might just encourage. Let’s see if GBP wants to look at the image of PM Corbyn today.

But it’s not just a UK issue. The same Telegraph is also reporting “Germany’s Hard-Left ‘Corbyn Problem’ Is Only Just Beginning”, as the coalition SPD’s base has been captured by hard-Left activists who wish to repudiate key policies such as the Hartz IV labour reforms, and to embrace a 2% wealth tax, a rent freeze, a 30% rise in the minimum wage, a much higher carbon tax, and to shift to massive fiscal expansion on social housing and infrastructure. It goes without saying that these are all also still potentially on the table in the US 2020 election.

Sending a message that suddenly the world is looking fine and dandy--or flagging that that an anti-Volcker tide is rising?--10-year JGBs just popped above zero for the first time since March, taking trillions of USD of negative-yielding debt off the global balance sheet. And in China we saw CPI and PPI, where the former rose to 4.5% y/y, higher than expected, but PPI actually came in stronger than expected at -1.4% y/y, which is useful in pushing real rates lower on both a CPI and PPI basis. One could see the latter as another marginal sign that the Chinese economy is picking up – for now.

Meanwhile, US Agriculture Secretary Perdue that he does not believe the next tranche of USD160bn tariffs will be put in place against China this weekend, even as Jim Cramer of Mad Money tweets he thinks Trump is better off playing the long game and not signing on to a weak phase one deal.

In short, markets can eulogise Volcker while secretly praying we never see his like again. Most central banks also don’t want to be Volckers anymore. They agree there is a risk of global ‘Japanification’ in 2020 despite the recent uptick, meaning even looser policy ahead, and some are girding their loins by reinventing themselves as ‘green champions’ to justify it. But just as they cannot imagine a world where they would have to raise rates like Volcker did, they cannot imagine that they might have to fight a different war if the political climate shifts in a different ‘anti-Volcker’ direction that re-empowers labour vs. capital.

Tyler Durden Tue, 12/10/2019 - 10:45
Published:12/10/2019 10:04:59 AM
[Markets] US STOCKS-Wall St rises on possible tariff delay hopes With the trade war continuing to take a toll on global growth, markets have been hoping for a possible delay in tariffs and looking for positive headlines on trade talks between the two sides. "It's probably the best the market can expect right now," said Robert Pavlik, chief investment strategist and senior portfolio manager at SlateStone Wealth LLC in New York. The Wall Street Journal also reported that officials from both sides hinted at extending trade talks. Published:12/10/2019 10:04:59 AM
[Markets] BookWatch: Read like Bill Gates: His 5 picks of 2019 The Microsoft co-founder is out with his annual end-of-the-year book recommendations.
Published:12/10/2019 10:04:59 AM
[Markets] 2019 Was Dreadful For IPOs – Will 2020 Be Better? 2019 Was Dreadful For IPOs – Will 2020 Be Better?

Authored by Andrew Moran via LibertyNation.com,

It is finally about to happen! After weeks of speculation, guesses, and conspiracy theories, Saudi Aramco’s initial public offering (IPO) is scheduled to begin trading soon. By selling just 1.5% of the company, the Saudi Arabia-owned crude oil juggernaut will receive a valuation of $1.7 trillion, which will make it the world’s largest IPO. The stock is already over-subscribed at home, but foreign investors do not have an appetite for a little bit of the crude bubbly. One reason could be IPO fatigue, especially with the kind of year the market endured.

Class Of 2019 Graduates

After a couple of down years for the IPO industry, it was thought that some of the hottest companies in the United States today would toss a lifejacket for investors underwater in their investments. Uber, Lyft, Pinterest, Slack, and WeWork (the office-sharing company withdrew its IPO) were supposed to save us. Instead, Uber is down 12%, Lyft is up just 1%, Pinterest is down 32%, and Slack is 17% in the red from their IPOs. Even the plant-based Beyond Meat, which had surged 50% from its IPO price, has been carved in half.

Hey, it is not all doom and gloom, though. Peloton, after bearing the brunt of an oversensitive social media mob taking umbrage at a television commercial for its exercise bike, has been one of the surprising bright spots. Even with the 7% loss in the first week of December, shares of the money-losing venture are still up 38% since going public.

That said, the entire situation could worsen over the coming months as the lock-up period – stocks that are eligible to be sold on the open market – of these IPOs are coming to an end. This could add pressure to companies that have already been struggling in their post-IPO sessions. It might also give some future IPOs some consternation about going public.

But why is this happening? Well, it turns out that stocks can no longer rely just on good faith. They need to begin generating a profit.

Goldman Sachs recently published a report that found businesses that went public this year are projected to produce the lowest profits of any year since the dot com bubble. In fact, according to the Wall Street titan, just 24% of IPOs in 2019 will post positive net incomes, which is the smallest percentage in 20 years. With interest rates at historic lows and the Federal Reserve pumping the market with cheap money, these companies can survive the bleeding a little longer.

According to a Bloomberg analysis of listings worth $100 million or more, unprofitable IPOs have raised the most cash of any year since the dot com era. Despite the poor returns of late, investors are scooping up IPOs in the hopes of getting served a plant-based-style burger. Can they be perpetual bulls? If the Fed keeps the spigot running, Wall Street will be there to chug it down.

Bill Gurley, a partner at venture firm Benchmark, recently told CNBC that the IPO process was a “bad joke” for Silicon Valley. He may be right, considering the lackluster performances of these stocks.

Will The Class Of 2020 Get Left Behind?

Either 2020 will be the start of something new or it will replicate 2018 and 2019. The experts are prognosticating that next year will see “global IPO activity pick up.” Forbes magazine is anticipating as many as 40 to 50 IPOs. Right now, the talk on the Street is that Airbnb, Hemptown, Postmates, Robinhood, and Casper will be the biggest businesses to go public.

Like their predecessors, many of these companies have already recorded disappointing quarterly results; Airbnb reported first-quarter losses and Postmates published steep third-quarter declines. HempTown, a company that specializes in hemp production, might be one of the few breakout stars of next year’s class due to a legislative push to ease regulations on hemp in the U.S., thanks to Sen. Mitch McConnell (R-KY).

With Plenty Of Money And You

It has been quite the year for American financial markets. Across the board, nearly every asset class performed well, from the U.S. dollar to precious metals to energy (except natural gas). If you put money in the stock market – whether it was an exchange-traded fund (ETF) or Treasuries – you likely enjoyed a return on your investment. Considering how the Dow Jones, Nasdaq, and S&P 500 each recorded all-time highs in 2019, it would seem counterintuitive that IPOs would drown in an ocean of red ink. But here we are. Unfortunately for the IPO class of 2019, it was the worst of times – can 2020 be an improvement?

Tyler Durden Tue, 12/10/2019 - 10:10
Published:12/10/2019 9:33:54 AM
[Markets] Boeing’s Culture Will Be Under Scrutiny in Congressional Hearings Federal Aviation Administration head Steve Dickson and a former Boeing employee who raised questions about MAX production practices back in 2018 will testify. Published:12/10/2019 9:33:54 AM
[Markets] Stocks open lower, shrugging off positive news in U.S.-China trade battle Stocks open lower, shrugging off positive news in U.S.-China trade battle Published:12/10/2019 9:05:18 AM
[Markets] House Democrats roll out articles of impeachment against Trump Top House Democrats on Tuesday announced two articles of impeachment against President Donald Trump, charging him with abuse of power and obstruction of Congress. Published:12/10/2019 9:05:18 AM
[Markets] Gold prices move up as focus turns to Fed meeting, China trade deal Gold futures move higher on Tuesday, after two days of pressure on assets perceived as risky, including stocks, on anxiety about the lack of a U.S.-China trade deal. Published:12/10/2019 9:05:18 AM
[Markets] The huge financial force even Albert Einstein missed Welcome to the ninth wonder of the world
Published:12/10/2019 9:05:17 AM
[Markets] House Democrats announce 2 articles of impeachment against Trump Top House Democrats on Tuesday unveiled two articles of impeachment against President Donald Trump, charging him with abuse of power and obstruction of Congress. House Judiciary Committee Chairman Jerry Nadler said his committee will meet later this week to consider the articles and make a recommendation to the full House. Published:12/10/2019 8:33:36 AM
[Markets] Futures Movers: Oil lower but trims early loss as report on China trade talks sparks fresh hope Oil futures are lower Tuesday morning, but recovered from overnight lows, following a report from the Wall Street Journal that is being perceived as upbeat in long-running negotiations between the U.S. and China on import tariffs.
Published:12/10/2019 8:33:36 AM
[Markets] Was October The Turning Point? Was October The Turning Point?

Submitted by Peter Garnry of Saxo Bank,

Summary: OECD's newest data on global leading indicators suggest October was the turning point taking the global economy from the contraction to the recovery phase. Since 1973 this phase has been the best one for equities in terms of relative performance to bonds. In today's equity update we show which countries and industries have typically done best in this phase.

* * *

For almost two years the South Korea economy has been declining as China slowed down and the US-China trade war hit investments and global trade. Today, OECD released its global leading indicators hinting that the global economy turned a corner in October moving from the contraction phase and into the recovery phase. The uncertainty is still high and adjustments over the coming months could wash away this on the surface turning point in the global economy.

The quote below is the official press release text.

Stable growth momentum is anticipated in the euro area as a whole, including France and Italy, as well as in Japan and Canada. Signs of stabilising growth momentum are now also emerging in the United States, Germany and the United Kingdom, where large margins of error remain due to continuing Brexit uncertainty. Among major emerging economies, stable growth momentum remains the assessment for Brazil, Russia and China (for the industrial sector). On the other hand, the CLI for India continues to point to easing growth momentum.” (OECD – Paris, 9 December 2019)

Regardless of October being a turning all the numbers are suggesting that growth momentum is stabilising in all key economies including Germany. For now it looks like the policy action from central banks have stopped the bleeding. Add to this announced fiscal stimulus by Japan last week and South Korea last month. In addition Europe is planning large green investments next year. The fiscal impulse could lift growth momentum into 2020. If this is the case then on the margin that is net positive for Donald Trump’s aspirations for being re-elected.

Our business cycle map on country level going back to 1973 suggests that if the turning point came in October then we are entering the most rewarding period for investors in equities relative to bonds. The average outperformance for equities vs. bonds in USD terms has been 9.4% for every recovery phase. Historically the best performing equity markets have been Hong Kong, China, Singapore, Sweden, Brazil, South Africa and Australia. This should not be a big surprise given the pro-cyclicality of these markets. Another positive aspect of these markets is that their valuations are below the global average.

The same analysis carried out on industries shows that the best industries in the recovery phase are semiconductors, household products, real estate, diversified financials, consumer durables & apparel, and healthcare equipment & services.

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And for those who believe this analysis is too optimistic, here is Nordea explaining "Why this is not 2015/2016 all over again."

Tyler Durden Tue, 12/10/2019 - 09:30
Published:12/10/2019 8:33:36 AM
[Markets] U.S. stock futures turn upward on prospect of tariff postponement U.S. stock futures turn upward on prospect of tariff postponement Published:12/10/2019 8:08:41 AM
[Markets] Watch Live: Dems Present Plans For At Least 2 Articles In Impeachment Push Watch Live: Dems Present Plans For At Least 2 Articles In Impeachment Push

Watch Live (due to start at 9am):

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Nancy Pelosi is racing against the clock to deliver the ultimate stocking full of coal to President Trump - a holiday season impeachment. And as Democrats and Republicans on the House Judiciary Committee wrangle over the size and scope of the articles of impeachment, Bloomberg's Congressional reporters (who are apparently still talking to high-level sources despite the impending demise of Bloomberg's entire Washington bureau now that their namesake founder apparently has convinced himself he can win big on Super Tuesday) have brought us an update.

It appears that the articles of impeachment, which could be finalized by the end of this week and put to a vote next week before the start of Congress's holiday recess, will include two independent articles focusing on abuse of power, and obstruction of Congress.

Committee leaders will reportedly unveil their next steps re: impeachment Tuesday morning at a 9 am press conference on Capitol Hill.

Judiciary Chairman Jerrold Nadler, Intelligence Chairman Adam Schiff, Foreign Affairs Chairman Eliot Engel, Financial Services Chairwoman Maxine Waters and Oversight Chairwoman Carolyn Maloney will participate in the hearing, along with Pelosi.

The announcement comes after a hearing where lawyers for Republicans and Democrats presenting their dueling interpretations of witness testimony from the past few weeks (no new information was brought to light on Monday).

Here's the Democratic position, according to their lawyers...

“The evidence is overwhelming that the president abused his power” by trying to get Ukraine to help his prospects for re-election by announcing an investigation into a political rival, former Vice President Joe Biden,” said Barry Berke, counsel to House Judiciary Democrats.

He and Daniel Goldman, counsel for Democrats on the Intelligence Committee, also cited numerous instances of the Trump administration withholding documents and other evidence sought by Congress in connection with the Ukraine probe.

...and the Republican position.

The panel’s Republican counsel, Steve Castor, reiterated one of the chief defenses of the president that’s been put forward by Trump allies: "The impeachment inquiry’s record is riddled with hearsay, presumptions and speculation."

He accused Democrats of pursuing an "artificial and arbitrary political deadline" to overturn the 2016 election and impeach Trump’s before the Christmas holiday.

Goldman detailed what he called four “critical” findings from the investigation, according to Dems. All of these points will likely feature prominently in the articles.

  • Trump used the power of his office to pressure and induce the newly-elected president of Ukraine to interfere in the 2020 presidential election for Trump’s personal and political benefit.
  • In order to increase the pressure on Ukraine to announce the politically-motivated investigations that the president wanted, he withheld a coveted Oval Office meeting and $391 million of essential military assistance from Ukraine.
  • Trump’s conduct undermined the U.S. election process and poses an imminent threat to our national security.
  • Faced with the revelation of his pressure campaign against Ukraine, Trump directed an unprecedented effort to obstruct Congress’ impeachment inquiry into his conduct.

Meanwhile, Republicans insist that the Dems' impeachment drive was a waste of time because it doesn't show abuse of power.

Castor accused Democrats of sustaining a months-long quest to find an issue on which to impeach Trump. After Mueller’s investigation didn’t deliver the results they wanted, he said Democrats now are focusing on Trump’s interactions with Ukraine, particularly his July 25 phone call with Ukrainian President Volodymyr Zelenskiy.

"The record in the Democrats’ impeachment inquiry does not show that President Trump abused the power of Congress or obstructed Congress," Castor said. "To impeach a president who 63 million people voted for over eight lines in a call transcript is baloney."

Unfortunately, the impeachment hearing blitz has done little to shift public opinion. Poll averages com